As has been the case for the past few weeks, an empty economic calendar has allowed for some politically-dictated trading this Monday.
Despite Theresa May being caught between a rock made out of the EU wanting the UK to cough up the money for its financial ‘obligations’, and a hard place constructed from Michael Gove and Boris Johnson-led Leavers seeking justification for the £40 billion divorce bill, the main driver this Monday came out of Germany.
Angela Merkel and the CDU are yet to form a coalition government despite it being almost 2 months since the German federal elections, and with the Free Democratic Party walking out of talks last night the Chancellor’s hopes of doing so any time soon suffered a significant blow. If Merkel can’t get the FDP back on board she may have to form a minority government, or, worst-case scenario, send the German public back to the polls.
Unsurprisingly such uncertainty in the region’s powerhouse has caused the euro to get off to a shaky start, slipping 0.3% against the dollar and half a percent against the pound, taking the currency to a one week low against the latter. The euro’s decline has mitigated the losses felt by the DAX, though the German index is still stuck below 13000 after falling 0.2%.
As for the UK, sterling’s gains against both the euro and the dollar – where it is up 0.2% – has caused the already ropey FTSE to get off to a limp start. The UK index slipped 0.4% after the bell, leaving it just above 7350 at its worst price since the end of September.
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