Weekly Market Review 26 of November
OVERVIEW

The relations between the UK and the EU continue to deteriorate. Both sides are talking about perspectives of parting. The probability that Britain eventually will leave the EU is constantly growing. The survey recently showed that 56% of the UK citizens would like to leave the EU. In Brussels nowadays officials tend to be more calm and their reaction to signs coming from the island seems to be more indifferent than it used to be. During recent summit the British Prime Minister David Cameron was perhaps the only leader calling for freezing the EU budget. A lot of people in the EU now suppose that the EU will do much better without Britain. They assume that in the long term Britain will suffer more than anyone in case the UK eventually decides to abandon the EU. This is the traditional argument which is not quite provident. Of course Britain might regret its exit from the union. But the EU will also suffer the consequences. Anyway without Britain as a part of the union Europe can forget about its ambitions to become a significant world power.

CURRENCIES

EUR/USD

Last week the Euro grew against the Dollar from 1.2735 to 1.2990. The Resistance above is at 1.3388. But in order to follow in this direction further up the Euro needs strength and certainty which are not there at the moment. Analysts mention that against background of the crisis and the decline of the standards of living in Europe, a lot of protest activity is seen including separatist movements. If recently the market was concerned because of the probability of a few states abandoning the monetary union, now there is a chance that attention of the market will be drawn to the risk of collapse of some states (Spain for instance). It is recommended to watch closely the elections in Catalonia at the coming weekend. The victory of the CiU party might strike the Euro badly. 



GBP/USD

The Pound appreciated against the US Dollar last week from 1.5881 to 1.6050 with further recoil to 1.6020. The Resistance above is near 1.6295, but the problem is that in case of the sales’ pressure on the Euro the Pound will apparently follow the trend of its continental neighbor as has already happened a lot in the past in similar situations. There are no firm factors for the Pound growth right now anyway. Overall the technical picture suggests a bearish trend. The probability of stabilizing for a while is not quite high.