Playground squabbles
The Dollar is on the rise with the Pound and the Euro feeling the pressure of increased political uncertainty. The Dollar’s early bid of the week stems from the White House’s suggestion over the weekend that arms treaties with Russia should be suspended. Amidst an incumbent crisis in Saudi Arabia, the elevated political tension adds to already significant defensive dollar demand and investors’ appetites for safe haven assets including gold, the Japanese Yen and CHF. Despite government borrowing figures in the UK coming in significantly below consensus and recording the lowest borrowing volumes for September in 11 years, the Pound has failed to sustain its valuation as of Friday’s market close. Following appearances from Brexit Secretary Dominic Raab over the weekend and rumours that May could be willing to break certain Brexit red lines in order to achieve a deal, markets are left waiting for more concrete news. May is due to address parliament later today in an event that could promise to take centre stage. By all accounts, announcement of a deal should be supposed to produce significant fallout within cable with technical analysis suggesting the pair could reach as high as 1.40. EURGBP, however, is likely to be more contained with channel trading to be broken adding conviction to the implausibility of parity. The correlation of Italian yields and the Euro has risen to a 5 year high with intense debate between European institutions and Italy yielding little progress so far. The ECB will host a press conference following its monetary policy decision on Thursday. European Bank President Draghi has already mentioned in previous weeks of the broad risks to growth within the Eurozone economy. Market reaction should be significant if the Bank acknowledges Italy as yet another risk to shaky growth.
Discussion and Analysis by Charles Porter
Click Here to Subscribe to the SGM-FX Newsletter
Related Insights
Daily Brief – Forgiven
Charles Porter
Tue 10 Mar 2026
Forgiven Even with an equity correction underway at the start of yesterday’s session, it still appeared that the market was under-pricing the risk of a protracted conflict in the Middle East. FX and fixed income asset classes had reacted more severely with stronger defensive bids into currencies including the Dollar and Franc, but still the […]
Daily Brief – Where’s the Beta
Charles Porter
Thu 12 Mar 2026
Where’s the Beta Amongst FX, there exist currencies known as ‘commodity currencies’. This isn’t a fixed basket of currencies, however, particular candidates spring to mind when the group are mentioned. The foremost amongst the G10 are the Canadian, Australian and New Zealand Dollars. These currencies are so-called because they typically exhibit a positive correlation with […]
Daily Brief – Fade America
Charles Porter
Thu 26 Feb 2026
Fade America There have been times during Trump’s second term that have had markets and financial commentators alike calling for an era of ‘sell-America’. Sell-America is the notion describing a scenario in which investor sentiment sours towards the US so much so that valuations across US assets decline. This is a unique scenario because many […]
