The Euro could be set for some rocky times ahead after the Spanish banking system has come back under the spotlight once again. Banco Popular was sold last week to Santander for just €1 after there was a run on the bank by its customers. Customers were withdrawing €2 billion per day which was by an urgent rescue was needed. The concern going forward is that other Spanish banks are likely to face difficulties and this could be Euro negative if there is financial contagion. Liberbank is the latest Spanish bank to have also come under the spotlight and the regulators have stepped in to stop market participants from shorting selling the bank.
EU industrial production numbers are released tomorrow and could give some clues as to the health of the EU and this is ahead of important inflation numbers released on Friday.
Meanwhile GBP EUR has dropped considerably after the surprise general election outcome last Friday. Democratic Unionist Party (DUP) leader Arlene Foster will be in Downing Street today to try and finalise a deal that will see support for the Conservatives to allow them to govern. The Queens speech however may be delayed next week and this could see the pound come under renewed selling pressure. If the Queens speech is voted down which is what Jeremy Corbyn has said he will do then the pound could come under a huge amount of pressure and potentially sink. Clients buying Euros would be wise to make contact and consider all options.
Prime Minister Theresa May will also be holding talks with French President Emmanuel Macron later today which could give some clues as to what kind of line he will take with the Brexit negotiations.
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