EUR-avin’ a laugh.
The Commission sits today to discuss the future of the Italian budget. The Euro found support on Friday and throughout the weekend whilst EU Commission President Juncker proclaimed that there was no risk of Italy leaving the Euro. Labelling the secessionist forces that threaten to drag Italy away from Eurozone membership as suicidal, Draghi allayed some investors’ fear surrounding European macro-political risk. The Euro also received a boost alongside the Pound Sterling as weekend rumours of a private Brexit deal within number 10 began to gather pace. Despite positive news on a post-Brexit trading relationship and a diminution of intra-Union risk, the Euro failed to make ground through 0.8800 within EURGBP and failed to sustain momentum above 1.14 against the Dollar. The Pound received a bid at market open having gained considerable momentum in the preceding Asian session. With the UK cabinet meeting tomorrow, Brexit remains at centre stage with an impromptu November summit many investors’ first-case scenario. With domestic political uncertainty and leadership challenges still on the cards, agreement on the European stage does not presuppose a future relationship. The race for the Senate and House is on with US mid-term elections taking place on Wednesday. Former President Obama took to the campaign trail against incumbent President Trump with polls suggesting the race is too close to call. Success for the Democrats at the mid-term elections will limit the efficacy of the Republican controlled White House and government to progress with political decision making. It is likely, therefore, that the Dollar would face a considerable headwind if Democratic support comes out stronger than expected. Emerging market currencies continued to consolidate today with the Turkish Lira and the South African Rand both gaining considerable value. Later this month, the South African Reserve bank will meet to produce a much-awaited monetary policy decision.
Discussion and Analysis by Charles Porter
Click Here to Subscribe to the SGM-FX Newsletter
Related Insights
Daily Brief – Deals, deals and nearly deals
Charles Porter
Thu 24 Jul 2025
Deals, deals and nearly deals Risk assets have received a boost as trade deals cross or approach the finish line ahead of next week’s August 1st deadline. First in yesterday’s session was the announcement of a deal between Japan and the US. This deal had proved elusive for a while and news of its completion […]
Daily Brief – A deal on trade?
Charles Porter
Tue 29 Jul 2025
A deal on trade? On Sunday, a deal was agreed between the EU and US on trade. This has been presented as both sides seeking to avoid the uncertainty of the tariff deadline approaching this Friday. However, a deal in the context of the EU is never quite so simple. An audience with Ursula von […]
Daily Brief – Change of plan
Charles Porter
Tue 22 Jul 2025
Change of plan The ECB’s decision to adjust policy in June hadn’t been a consensus view within the market. The probability of a rate cut increased into the decision, but many had expected the Bank to keep rates on hold, pausing to take stock of policy adjustment to date. The decision last month to make […]
