DAILY FX WRAP: The UK government formally triggers Article 50 while ECB source comments place further pressure on EUR
All eyes at the start of the session for European traders were on the fall-out from today’s Article 50 triggering by the UK government. Overnight it was announced that PM May had formally signed the document for it to be delivered to EU President Tusk and despite this being very much expected it was enough for traders to push GBP/USD below 1.2400 during the Asia-Pacific session. Thereafter, the GBP managed to claw back some gains against the greenback with some of the traction emanating from price action in the EUR/GBP cross. More specifically, EUR was very much seen out of favour early doors with EUR/GBP pulling back from a recent high of 0.8735 with desks touting month-end adjustments, the ramifications of Brexit for the EU itself and ongoing concerns about the Greek debt repayment plan. Thereafter, all eyes were on PM May and EU President Tusks’ simultaneous briefings but ultimately both counterparts stuck to the script and failed to reveal much about their upcoming negotiating positions, subsequently leading to a bit of a further relief for GBP.
Aside from Article 50, the EUR managed to extend its downtick amid the latest ECB source reports suggesting that markets possibly over-interpreted some of the hawkish takeaway which saw EUR/USD eye 1.0750 to the downside. Elsewhere, ZAR continues to remain in focus in EM markets with markets trying to assess whether or not President Zuma will opt to remove finance minister Gordhan despite alleged opposition from other party leaders. Finally, in antipodeans, AUD and NZD saw some mild divergence overnight AUD/NZD breaking above 1.0900 with newsflow otherwise relatively light.