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EUR and GBP: Italy responded harshly to the European Commission, and Theresa May may lose her post
October 23, 2018 1:21 amVideo
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The euro resumed its decline paired with the US dollar, as well as the British pound, which continues to remain under pressure amid uncertainty over Brexit.
Italy responded with a clear “no”
Today’s statements by the Italian government on the increase in public debt and budget deficit led to selling thee European currency, which rose on Friday amid reports made by the rating Agency Moody’s.
Italian authorities have stated that they will continue to adhere to an expense budget for 2019, despite the criticism of the EU. In their opinion, the deviation from the EU budget rules is a very difficult decision, but it is necessary to accelerate economic growth. The Italian government expects that the debt will be reduced over the next three years due to accelerated growth. The question of what will be the budget for 2020 and 2021 was not discussed.
Let me remind you that last week the European Commission sent a letter to the government of Italy with a claim, which stated the inadmissibility of expanding the budget deficit to 2.4% of GDP for 2019. Apparently, today’s statements of the Italian authorities was a form of response to this letter.
It should be noted that at the end of last week, the rating agency Moody’s downgraded the sovereign rating of Italy by one notch, to Baa3, but maintained its outlook on the rating as stable. However, as noted in Moody’s, the preservation of forecasts does not mean that the prospects of Italy are considered as stable. This Friday, traders and investors will closely monitor the decision of the rating agency S&P on the credit rating of Italy. S&P is expected to follow a similar path.
Trump and trade agreement with EU
Returning to another important topic, it should be recalled that tomorrow in Washington, the EU delegation and representatives of the United States will meet to discuss the prospects of concluding a trade agreement, which was agreed by Juncker and Trump in the summer of this year.
Let me remind you that during the meeting held on July 25 at the White House, US President Donald Trump and European Commission President Jean-Claude Juncker agreed to prevent a trade war and to develop a new trade agreement. After that, trade duties on the part of the US were frozen, as well as the desire to change something on the part of EU representatives.
Recently, US Secretary of Commerce Wilbur Ross has repeatedly drawn attention to the fact that Donald Trump’s patience is running out, and the delay in the negotiations may have a negative impact on their results.
All this has a negative impact on risky assets, which resumed its decline against the US dollar after Friday’s pause.
As for the technical picture of the EUR/USD pair, the return to the support level of 1.1480 can seriously affect the further corrective prospects of the euro. However, at the moment buyers have all the chances to build the lower limit of the new upward channel and continue to grow. A breakthrough of 1.1480 will lead to a decrease in the trading instrument by the lows of the month in the area of 1.1460 and 1.1430.
Theresa May risks her post.
In order to maintain her position as the UK prime minister, Theresa May will need to make a lot of effort. Today it became known that members of the Conservative party gave May 72 hours to succeed in the negotiations on Brexit.
Many members of the party are unhappy with the way the prime minister is negotiating. The critics were joined not only by supporters of Brexit, but also by its opponents. In order to declare a vote of no confidence in the prime minister, 48 votes of party members are enough. In this regard, it is unclear what steps May will take.
The fact that the problems are quite serious, say the quotes the British pound, which on Monday is declining against most of the world’s currencies.
The material has been provided by InstaForex Company – www.instaforex.com
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