Euro weekly update

In parliament on Tuesday, Prime Minister Theresa May was very clear that the ball is in the EU’s court when it comes to making the next move in Brexit negotiations. By way of reply, the European Commission’s Margaritis Schinas was quick to respond that “the ball is entirely in the UK court for the rest to happen”. That exchange added little to the debate but the prime minister also told MPs that Britain must be prepared for “every eventuality”, including leaving the EU with no agreement in place.

In a situation reminiscent of Alexis Tsipras in Greece two and a half years ago, Catalonia’s Carles Puigdemont could not bring himself to pull the trigger and declare independence from Madrid. Whatever the pain of remaining within Spain and the EU, leaving them would be a huge step to take.

Putting aside for a moment the illegality of Sunday’s referendum – the Madrid government and the courts ruled it as such – it is hard to argue that Senyor Puigdemont had no mandate to declare independence. The 39.6% of registered electors who voted for it was proportionally larger than the 37.5% of the UK electorate who voted to leave the EU.

Investors seemed fairly satisfied with the situation in Catalonia. They believe, trustingly, that the Madrid government will take control of the situation and it will all blow over. The euro, like sterling, was unchanged on the day against the Swiss franc, the Australia, Canadian and NZ dollars and the Norwegian krone.

Whatever his reasons for holding back, the decision avoided putting the euro on the spot. It didn’t have the best of days but it did strengthen by half a US cent and it went up by a fifth of a cent against sterling. But this independence business is not done with yet.

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