Brexit

Even after the latest round of negotiations between the EU and the United Kingdom in mid-July, there was little progress. According to EU chief negotiator Barnier, the deadlock even continued in crucial areas. These were the securing of a uniform framework for competition, above all through uniform standards and rules for state subsidies, as well as fishing rights in British territorial waters.

The European Recovery Fund has been taken by the market as a very positive sign on European solidarity. As a result, the chances of the eurozone breaking up are now reduced as the nations pull together to support the economy via the fund. There is a strong call option skew on heavy EURUSD options, so more EUR strength is anticipated by the market. The UK, on the other hand, is still struggling with Brexit negotiations.