Can negative sentiment be reversed?
Not a bad week for the Pound actually. We even moved above 1.20. The market seems to be getting used to these currency levels and can't really decide which way it will go next.
There were more than a few shocks and surprises to unnerve investors, notably the attempted coup in Turkey and the International Monetary Fund's downgrade of its forecasts for global growth.
Investors had to choose between the euro's safe-haven qualities and its unwilling involvement in the Brexit showdown. They really could not make up their minds so the euro was on average just about unchanged against the other dozen most actively-traded currencies. It strengthened by three quarters of a cent against sterling and lost one US cent.
After a hesitant start last Friday the euro headed mostly higher against the US dollar. It was initially hampered by some unusually punchy US employment data which indicated the creation of 287k new jobs in June. However, the balancing factor was a downward revision to the previous month's data, such that only 11k new jobs appeared.
Investors decided the net result was not strong enough to encourage any early interest rate increase by the Federal Reserve so they became less enthusiastic about the dollar.
With the Brexit vote clouding the view investors found nothing to distinguish the euro from the US dollar or the Swiss franc. The euro was unchanged on the week against the franc and just a dozen ticks behind the dollar. Not surprisingly, the euro made further headway against the benighted British pound, strengthening by another three and a half cents to leave it more than 10% above its level on Referendum Eve.
The euro zone ecostats came in mostly above forecast. Purchasing managers' index readings for manufacturing and services were higher on the month, showing stronger - though still not exactly vibrant - growth in the private sector. Retail sales in Euroland were in line with expectations, rising by 0.4% in May to put them 1.6% higher than the same month last year.
All financial institutions in Portugal must now abide by new legislation to provide the tax authorities with customers' account information. It is evident that such legislation only proves that the Portuguese government and lawmakers do not trust its citzens when it comes to income declaration for tax assessment.
All Portuguese financial institutions must hand over all of their customers financial details by 31st July 2017.
Eight days ago no one had ever heard of Article 50 of the Treaty of Lisbon. Even today few would be able to explain it to their mates down the Dog and Duck. But anyone with even half an ear on the news will be aware that it sets out the procedure for a member state to make its departure from the European Union. There is more than one complication with Article 50. For a start it has never been tested.
From the point of view of the European Council the problem is that only the departing country can initiate the process: Britain must resign, it can't be sacked by Brussels. From the standpoint of Westminster it is that exit negotiations can only begin once the trigger has been pulled; pre-negotiation negotiations are not allowed, at least in the opinion of most of the EU presidents.
IMPORTANT COMMUNICATION - THE EU REFERENDUM
The British electorate has given its verdict on the UK's membership of the European Union in no uncertain terms. In spite of the more emotional appeals to the contrary, this is not a disaster.
Contrary to many polls and the bookmakers predicting the UK to remain in the EU, but the UK public have voted to leave the EU. Truthfully, many are surprised by the outcome.
We are likely to see volatility in the currency markets as well as the stock markets for the next few days. At the time of writing, Sterling had not fallen as predicted. Prior to the result announcement, the pound was trading at approximately €1.30 this morning, but as the result was announced, the pound dropped to €1.23, and continues to range between €1.22 and €1.24 against the Euro.