“With Salvini, an Italian ‘Brexit’ is not impossible.” Mr Salvini hit back against his political opponents: “Under-the-table stitch-ups, palace intrigues, technocrat or caretaker administrations will not stop Italians who want a strong government.” Italy is the Eurozone’s third-largest economy, so a deterioration in Italy-EU relations will have a detrimental effect on market confidence in the single currency.
Economic woes also continue to haunt EU markets ahead of influential German inflation data, with euro traders concerned that the Eurozone’s largest economy could face a recession in the near-term.
Meanwhile, the pound is starting to recover today following Friday’s dismal UK growth figures.
These showed the first contraction in the UK economy since 2012.
GBP/EUR moved away from its lowest levels in almost a decade despite the fact that no-deal Brexit fears are also on the rise after Ireland’s Taoiseach Leo Varadkar said yesterday that an Irish backstop renegotiation would not be on the agenda when he meets Boris Johnson in early September.
Varadkar’s spokesman commented: “[The talks] would give both sides an opportunity to gain a better understanding of their respective positions.”
“As has repeatedly been made clear, the withdrawal agreement and the backstop are not up for negotiation.”
With no UK economic data out today, pound traders will focus instead on Brexit developments. They will also be looking ahead to tomorrow’s influential UK jobs data.
If growth in UK average earnings rises (as forecast) the GBP/EUR exchange rate’s recovery could continue.