As it turned out, Europe has offered a lot of surprises in 2016- and that’s what businesses should be paying attention to…
The Italians have rejected a constitutional referendum triggered by their Prime Minister Matteo Renzi yesterday. The latter promised to step down if he was to lose the referendum, following the steps of David Cameron earlier this year. The referendum proposed by Prime Minister Matteo Renzi would have shrunk the size and curtailed the powers of the Senate. Renzi argued the change would save money and streamline politics.
Meanwhile in the UK…Supreme Court hearing begins today!
In the last few months, it’s been hard for the UK to escape from the aftermath of Brexit.
Brexit is very much an on-going process and is now in the hands of 11 judges at the Supreme Court who will sit together to decide Britain’s future. 10 men and one woman will determine whether the government needs to hold a vote in Parliament before officially leaving the European Union.
An analysis of the Foreign Exchange Market…
Italian voters overwhelmingly rejected Prime Minister Matteo Renzi’s constitutional reform proposals, driving him to tender his resignation as promised.
While the result was widely expected, the Euro took a hit in Asian trading, falling as much as 1.4% against the Dollar. The victory margin of the Yes vote is a boon for the mainly anti-EU populist parties in Italy which would do very well if a snap-election were called due to this political momentum. This is the main cause for the Euro’s current volatility. That said, at the time of writing, the currency has bounced aggressively.
Despite an initial fall post the Italian referendum result, the euro has since climbed against its major counterparts with European markets dismissing political problems in Italy after the defeat of the nation’s Prime Minister Matteo Renzi in a referendum on constitutional reform. The Euro was also supported by Survey results from the IHS Markit which showed that the euro area private sector expanded at the fastest pace in 11 months in November.
The British Pound gained more than 1% versus the Dollar and Euro, bolstered by Brexit minister David Davis’ comments on a smoother Brexit transition. This was further backed by better than expected UK construction PMI data and Dollar weakness after the print of less than desirable earnings data on Friday. Despite better than expected Services PMI data from the UK, GBP/EUR has seen its gains trimmed post the Renzi referendum result whilst GBP/USD remains flat around last week’s highs.
With the volatility canon already firing shots, it might be prudent to hedge especially if you are dealing with currencies on a daily basis-: call Indigo FX on 0207 856 2467 for further details on how to do this.