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 – A rising tide lifts all boats
Charles Porter
Thu 16 Oct 2025
A rising tide lifts all boats As the Dollar continues to perform lacklustre oscillations, key pairs remain rangebound. The trend so far this week has been for a mildly weaker Dollar. Given that the Dollar is considered the primary counterparty for most currencies, this creates a rising tide effect across the rest of the market. […]
Daily Brief – Calling time on Swissy
Charles Porter
Tue 14 Oct 2025
Calling time on Swissy Switzerland’s Franc may be destined to faulter under its own weight. Despite rock bottom interest rates, the Swiss Franc has been a significant beneficiary of the post-Covid and Trump2 world. EURCHF, a key barometer of European risk, shows some 20-cents worth of Swiss rally post-Covid. The pair has dropped from well […]
Daily Brief – A look ahead
Charles Porter
Thu 9 Oct 2025
A look ahead The UK Pound continues to be influenced by the gilt market and fiscal concerns. Sterling has been a very expensive short this year, contributing to its relative outperformance. In fact, the few episodes of sustained weakness we have seen tended to have either coincided with a global risk-off turn or a sharp […]
