Euro benefits from Sterling, Dollar negativity
As might have been anticipated, the handling of Brexit by the UK Government, which could usually generously be described as incompetent, but is now actually getting worse and descending into fiasco, has provided an unexpected but doubtless welcome boost to the Euro. That is not to say that the EU single currency has now developed an investible outlook, because it hasn’t. The fact is that the Euro is not really master of its own destiny, relying more on the twin Ugly Sisters of Sterling and the Dollar to make it look attractive by comparison. With this in mind we don’t have too much confidence in a Euro breakout against the Dollar (EURUSD), and will build a short position into any rally unless it can close above 1.1800. We feel that that against Sterling (EURGBP) will remain a little more stable but it’s difficult to get excited about either when the Governments of both appear committed to a course of self-destruction.