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While the head of the Catalan police was left at liberty, two pro-independence activists were sent to jail late on Monday. are accused of sedition and now await a trial. The jailing of  Jordi Sànchez and  Jordi Cuixart has angered many in Catalonia, whether they are supporters of independence or not. Holding political prisoners is not the way to go in order to de-escalate the situation.

Earlier in the day, Catalonia’s President Carles Puigdemont refused to say he did not declare independence. He chose not to play by the rules set out by Madrid and further complicated the situation. A new and final deadline awaits the rich northeastern region, on Thursday at 8:00 GMT.

The Spanish government, led by Mariano Rajoy, intends to suspend the Catalan autonomy if there is no clear denial of a declaration of independence. Invoking Article 155 of the Spanish Constitution would be unprecedented.

The government is already revising the economic outlook to the downside: first and foremost for Catalonia, which has been abandoned by quite a few big companies. Naturally, this affects the whole of Spain, the eurozone’s fourth-largest economy.

EUR/USD is trading at 1.1770, after having fallen to a low of 1.1755. This is an extension of the drops seen yesterday. Further support awaits at 1.1720.

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