DailyFX European Markets Wrap: British Election Debates and Greece Debt Fears drive The European Markets Lower

British election debates and Greece debt fears drive the European markets lower.

It’s a sluggish start to the markets after the long holiday weekend with airline stocks dropping thanks to British Airways IT failure over the weekend. BA’s parent company IAG is falling but despite this the stock hit a two-year high last week and despite today’s fall, the shares are still up 64% from their November 2016 low. Bourses on the mainland are subdued with talk of tensions surrounding the Greek debt crisis and an early Italian election.

Sterling is rebounding after the TV interviews last night in Britain with Prime Minister Theresa May and Labour leader Jeremy Corbyn. May reiterated her stance that no deal on Brexit with the EU is better than a bad deal, while Corbyn seemed to be more compromising - ensuring a deal would happen if Labour won the election. The drop seen in Sterling last Friday was down to a poll showing the gap between the two narrowing. We’re expecting volatility right up until the election for the pound. It’s now above $1.2846, the high set during Monday’s thin trading.

Greece’s debt issues are back in the spotlight after the county’s finance minister spoke of his worry if Brussels block a debt deal at the next meeting of euro area finance ministers. Greece is due to pay £7.5bn in debt repayments by July. For the common currency, a series of lower highs and lower lows is expected to remain unless we see a move back above $1.1190. A drop below $1.1080 would likely be the signal for a deeper retracement to $1.10 itself.

Ryanair posted a record profit of 1.32bn euros thanks to the rise of passenger numbers. The airline also expects fares to keep falling between 5% and 7% in the 12 months to March next year in part due to Sterling weakness. But warned both Brexit and the terror attacks fears remain challenges.