Brexit discussions are ramping up as Boris Johnson and Jean-Claude Juncker find something to agree on in Luxemburg. Even though there’s still a lot to cover, they’ve both agreed Brexit discussions “need to intensify” as they now look to have meetings on a daily basis between the UK and EU. One point Johnson did reinforce was his determination to stand by the Good Friday Agreement – this being “determination to reach a deal with the backstop removed, that UK parliamentarians could support." Whether this happens or not we are yet to see but an insurance policy along the lines of the Irish backstop is something the EU are still looking for with Belgian foreign minister demanding the PM to “come, maybe, with some ideas.”
However, the day in Luxembourg didn’t go all too swimmingly as the day ended with Johnson missing from a planned press conference with Xavier Bettel. As pro-EU protestors proceeded to cause havoc outside, Johnson refused to join as felt their points wouldn’t be fairly heard. This left the prime minister of Luxembourg outside on his own to outline what a ‘nightmare’ Brexit is. Bettel also used this opportunity to state he would only delay the Brexit deadline if it serves a purpose and with no Johnson to offer a rebuttal it left the day on a somewhat sour note and with no breakthrough.
Another important story in global markets is the sharp rise we saw in the price of oil. Wall Street fell in the afternoon after the weekend’s attack on Saudi crude oil facilities knocked out five per cent of the world’s supply.
The attack on the world’s biggest oil exporter boosted oil prices by as much as 20 per cent before they eased off, as US President Donald Trump gave the green light for use of the country’s emergency oil stockpile to keep supplies stable. Going forward we could see significant impact on the dollar, especially if the risk of military intervention increases.
Today we will begin a three-day hearing on whether the PM Johnson shut down parliament unlawfully. We could see the currency pair move in the aftermath yet despite the uncertainty in the market GBPEUR continues to trade towards one month highs yesterday and continues to test the 1.13 (0.8850) key resistance level. This presents an attractive opportunity on the Euro for importers.
After testing the 1.25 momentarily yesterday the dollar now sits around 1.24 ahead of the much anticipated FOMC monetary policy announcement tomorrow evening.
With US-EU tariffs threat on the horizon the currency pair returned below 1.10. One major announcement to look out for today is the German ZEW Survey – which measures institutional investor sentiment, reflecting the difference between the share of investors that are optimistic or pessimistic. A positive note here could see the Euro strengthen, especially following lower than expected German manufacturing data.
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