EUR/USD is trading higher within the recent range of 1.0960 to 1.1070, off the post-Brexit low of 1.0905 but certainly below previous levels. This seems like necessary correction that goes hand in hand with a bounce in the value of the pound.
EU leaders including the the soon-to-leave UK and soon to quit UK PM Cameron are convening today. Can we hope for some certainty on the Brexit path? Or is there a sell opportunity here?
The UK political system remains in turmoil, with a “lame duck” PM still in charge. Cameron does not want to trigger the formal EU exit by invoking Article 50 and it seems that his potential successor Boris Johnson does not want to do that either. The opposition Labour Party is in a worse situation: an all out rebellion against leader Jeremy Corbyn is in place.
In the EU, there are voices urging the UK to begin the process immediately while others are patient. In any case, nobody is open to informal negotiations. The EU Summit including Cameron, could provide some clarity on this, but nothing is certain. The beleaguered PM is on his way out, so it is hard to assess what he can do.
At the moment, it seems more likely that the government, led by whichever leader, will respect the choice of the people. Without a clear path, we could see fresh falls, and this could lead to a slide back down in EUR/USD as well. A UK exit of the EU is also the EU being left behind.
In the US session, the big event is the final US GDP report due at 12:30 GMT. A small upgrade on Q1 output is expected.
Here is the EUR/USD chart: