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EUR/USD Retraces Its Steps as Catalonian President Calls for Mediation

Many will have kept a close eye yesterdays speech by Carles Puigdemont.  The outcome demonstrated Spaniards for and against the separation with Spain and Catalonia, it appears clear that the EU is keen to avoid another Brexit-esque scenario which would have negatively affected EU.

Barcelona Catalonia referendum

The Catalonian president took the stand addressing the nation in Barcelona. Markets had feared Puigdemont was about to formally declare a separation from Spain, however for the moment it was not to be.

This being said the Catalonia President made his thoughts clear stating that Catalonia had

Earned the right to independence.

Insinuating that rather than demanding independence it should be achieved through mediation with Madrid, he insisted he was acting honourably on behalf Catalonians in the region.

I defend the mandate of the people of Catalonia to become an independent republic

Madrid’s fears allayed for the time being

Any talk of a declaration of independence would have been thwarted swiftly with Spain. It is understood that Prime Minister Mariano Rajoy would have seized the region almost immediately. Madrid does not recognise the referendum that was voted on. Previously Rajoy has blankly refused to hold talks with Puigdemont, it will be interesting to see if this changes.

Reaction from around Europe

Naturally, leaders from around the European Union called for calm and comments included ‘pulling together’ and ‘unity’ were rife.

The Italian Foreign affairs minister called for talks between Catalonia and Madrid saying

We express our confidence in the Spanish Government ability to protect constitutional order and legality and consequently, to ensure respect the rights of all citizens.

EUR/USD update following Puigdemont’s delayed declaration

Although dramatically down from the last few months highs which saw EUR/USD hit a 1.2023 the pair has managed to make up some ground. Over the last few weeks, EUR/USD had fallen to lows of 1.1689. However, following Puigdemont’s request for mediation EUR/USD has recovered with the currency pair sitting at 1.1854.

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All eyes will now turn to Puigdemont’s next move with Prime Minister Rajoy requesting he state his position with the Prime Minister saying 

The cabinet has agreed to formally ask the Catalan government to confirm whether it has declared independence.

It is understood the Spanish government have since held crisis talks in order to plan for a possible future declaration for independence, with the prime objective being to avoid a repeat of the ugly demonstrations witnessed after the referendum outcome.

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