EURGBP TECHS: Approaching Key Resistance

• +10,000 TYQ5 108.5 puts, 4
• -5,000 TYU5 115.5 calls, 10

PM Pedro Sanchez says that he plans to run for another term in office at the end of the current parliament in 2027. Sanchez has come under significant pressure from Spain's NATO allies in recent days over Madrid's intransigence on boosting defence spending to the 5% of GDP level agreed to by other leaders. However, it is the domestic situation where Sanchez faces the biggest threat. A scandal involving two close allies who allegedly accepted kickbacks on state contracts has dealt a significant blow to the PM's standing. 

• The Spanish Constitution only allows for 'constructive' votes of no confidence, where a new PM candidate must be proposed and able to secure a majority before the old gov't can be removed. At present, this appears unlikely to come to fruition despite his gov'ts minority status. However, Sanchez could face a leadership challenge from within his centre-left PSOE if he is seen as toxic to the party's chances of re-election.
• The opposition has accused Sanchez of using the row over defence spending as a "smokescreen" to distract from domestic issues. Sanchez trying to paint himself as the defender of Spain's welfare state against the unpopular figure of US President Donald Trump could bolster the PSOE's opinion polling support (polls currently show a right-wing Popular Party-Vox alliance as the most likely next gov't).
• Spain's reticence on boosting defence spending, and a row over the proposed merger of two banks, has left Sanchez increasingly isolated at the international level (see 'MNI: Spanish Eurogroup Bid Undermined By BBVA, NATO - Sources', 25 June). 

• Nasdaq (NDX) breaks higher on the Open to reach a new all time record high on the Cash Open, this level was at 22,222.61, and the Index has printed a 22,329.68 high.
• Cash SPX has also gapped higher, but the index is still short of the record high situated at 6,147.43.