Yesterday saw the Pound suffer its worst day in a month as the Irish border issue and conservative party fractions weighed heavy on the domestic currency. The tone was set early in the day when a major Broadsheet released news that the DUP, the Northern Irish party which props up May’s government, will back an amendment proposed by rebel Eurosceptic lawmakers. This amendment would effectively make the EU Backstop proposal illegal. The DUP are small in parliamentary presence but are becoming increasingly influential in the key issue of the Irish border.
Theresa May made a speech in the House of Commons towards the end of the day with the aim of quelling tensions within her own party and to subdue the increasingly partisan rebel brexiteers. She stated that 95 percent of Britain’s Brexit deal has been agreed but repeated her opposition to the EU proposal on the Irish party. The recent fierce criticism stems from the perceived failure to clinch a deal at the EU summit, and May stated that she is ‘prepared to explore every way possible’ to come away with a deal. The market largely ignored the sentiment as levels remained way down.
The clash between the EU and the Italian government on its domestic fiscal policy is still at the forefront of Euro traders’ minds. The Italian Government said that they would be willing to temper its budget for next year, but would not compromise on its need to break deficit rules in order to help its poorest citizens. Finance Minister Tria accepted that the plans did not comply with EU rules, but said the increased spending was to jump start economic growth and to help the poorest segments of Italian society. This does not appear to have been too persuasive with the European commission as they expressed ‘serious concern’ regarding Italy’s current budget plan.
16.20 – GBP: BOE Governor Carney Speech