Britain may continue to make payments to the European Union

Yesterday, political news dominated the scene. In the UK, Brexit secretary David Davies and Chancellor Hammond suggested that Britain may continue to make payments to the European Union budget even after Brexit in exchange for access to the single market. The comments caused the pound to strengthen against the dollar as this is the first time such a view has been officially discussed. It is very early days but it appears that the UK government is seemingly becoming more pragmatic and ministers are softening their stance from the hard line that was taken at the Conservative party conference in October.

In other news, French President Hollande announced on live TV that he will not be seeking re-election in 2017, becoming the first sitting president in modern French history to rule out a re-match. Hollande admitted that it was risky to pull out of the race and also warned of the strength of the Front National, the far-right party headed up by Marine Le Pen. There will now be a contest within the Socialist party to find a different candidate with a likely favourite being Prime Minister Manuel Valls.

Expected results in Europe this weekend

It’s a pretty quiet end to the week in Europe today with the sole release being the October PPI print for the Euro area. The main focus for markets today will be November US non-farm payrolls out in the US this afternoon.

This weekend, Italy will attract attention with the constitutional referendum being held on Sunday. Provisional turnout results will start coming in from 7pm UK time with exit polls expected around 10pm on Sunday night and final result could come in early on Monday.

It will also be worthwhile to keep an eye on the results of the Austrian presidential election re-run. Voting ends at 4pm GMT on Sunday with initial projections expected soon after.

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