U.K. Banks Fret over Possible Alienation at E.U. Summit

(eToro Blog) With the E.U. summit due to begin tomorrow, there is word that the U.K.’s financial district, aka the City of London, is now expressing concern over David Cameron’s decision last December to reject the E.U.’s then-proposal for a fiscal treaty. The reasoning behind Cameron’s decision was simple; the E.U. refused to provide any safeguards or legal protections for the City of London. Cameron was the lone holdout among all of the E.U. members, and his decision resulted in the E.U. membership having to create a work around to move the fiscal treaty proposal forward.

As Cameron prepares to attend this week’s summit, earlier concerns have been revisited, and several representatives of the financial center worry that Cameron’s decision will have backfired, and that their standing as the premier financial center in Europe may have been damaged as a result. Further, they believe that the demands were unnecessary.

What critics believe Cameron is going to do is hand over a new list of safeguards that he will demand for the City of London, should the proposal for an E.U. banking union is passed and implemented as many expect it will be. However, this time around, Cameron is working hand-in-hand with representatives of the financial center so that their coordinated position will be put forth; their joint goal is to ensure that any E.U. banking union will not undermine the U.K.’s access to the European market. The U.K.’s Deputy Prime Minister, Nick Clegg, sees the need for a full Euro-based banking union, but believes that it could hold some risks for the U.K. financial district, including a protectionism aspect that could discriminate or be tilted in favor of the European Monetary Union members, which of course does not include the U.K.

Cameron’s opt-out decision in December is also believed to be the cause for the somewhat strained relationship between the U.K. and the other E.U. members. The worry is that “hard feelings” among the members will limit the U.K.’s influence on the evolving framework for proposed financial regulation. Head of the British Banker’s Association, Angela Knight, said that the U.K.’s major banks are concerned that as the E.U.’s decision making process begins, the U.K. won’t be “fully at the table.”

The GBP/USD pair is currently trading lower at 1.5622, and sentiment on OpenBook is driven by the bulls with 78% buying against 22% selling. OpenBook trader chrisparkerrr from Brazil closed a handful of positions a short while ago, with average profits on the long position at 16% and average profit on the shorts at just above 15%.

OpenBook guru santoshtiwari, a resident of the U.K., has also profitably worked both sides of the GBP/USD pair with a 10% long and 4.50% short. Over the last month, the guru has increased his allocation in the GBP/USD pair to 91.1%, which has provided an 8.3% gain over the period and over the same period for all trades his profit was 2%.

The EUR/GBP is trading higher at 0.8002, and sentiment on OpenBook is overwhelmingly bullish, with 95% buying against 5% selling. Spanish trader tronlez closed a profitable long position in the pair earlier which originated as a CopyTrade from trader Marco2412. Trader Marco2412 as of this writing has 77 copiers and 851 followers; in the past month, the trader’s allocation to the pair was 6.3% with a 3.4% gain. The trader’s aggregate profit over the same period was 11.1%; for the year, the trader has a recorded 51.3% profit.

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