While the European indices seemed pretty pleased with how the weekend panned out, the pound was far more reserved in its reaction.
Jumping just over 1%, the FTSE found itself climbing back above 7030 on Monday morning, recovering a decent chunk of the end of last week’s losses in the process. The DAX and CAC were similarly perky, rising 1.3% apiece, while the FTSE MIB added an extraordinary 3% as trading got underway.
The latter’s surge suggests investors are more cheering the chance that the relationship between Italy and the EU is thawing, rather than any jubilance over the agreement of a Brexit deal (though that’ll be playing its part). Comments from Italian deputy PM Matteo Salvini on Sunday, hinting that the country’s controversial 2.4% budget deficit could be lowered, came after reports of a meeting between Prime Minister Giuseppe Conte and European Commission President Jean-Claude Juncker on Saturday night. These signs of progress were like catnip for good news-hungry investors, explaining the over-sized reaction of the European indices.
And what of sterling? Well, it was in a mixed mood after the bell. Though it managed to add 0.2% against the dollar, lifting cable towards $1.2838, it actually fell by the same amount against a rebounding euro, drifting back under €1.1285. The muted nature of its open is likely because Theresa May’s Brussels success comes laden with some potentially deal-sinking domestic caveats, namely the House of Commons’ ‘meaningful vote’ expected to be held on 12th December.
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