However, as Mr Salvini has indicated a willingness to pair with the 5-Star Movement – which would bolster the League’s majority against the centre-left Democratic Party – Euro traders remain jittery. Five Star Movement leader Luigi Di Maio was critical of Mr Salvini, saying: “[Today is the] day when the League will have to answer for its faults for having decided to bring everything down, opening a government crisis in the middle of August.” The latest developments could also increase the likelihood of Italy leaving the European Union. 

Meanwhile, the Pound failed to gain on the Euro after European Council President Donald Tusk rejected Prime Minister Boris Johnson’s call for the Irish backstop to be scrapped.

Mr Tusk said: “The backstop is an insurance to avoid a hard border on the island of Ireland unless and until an alternative is found. 

“Those against the backstop and not proposing realistic alternatives in fact support re-establishing a border. Even if they do not admit it.”

The latest breakdown in UK-EU negotiations have further exacerbated no-deal Brexit fears.

Elsewhere, today’s publication of the CBI industrial trends survey indicated the slowdown in British manufacturing eased in August.

The CBI’s monthly order book rose to -13 from July’s -34.

Anna Leach, the Deputy Chief at CBI, was nonetheless pensive: “Despite signs of stabilisation in the data this month, UK manufacturers remain on the receiving end of a double whammy: the slowdown in the global economy and Brexit uncertainty.”

At the same time, US-China trade tensions have increased pressure on UK manufacturers by fanning uncertainty about global demand.

Looking ahead, the Pound Euro exchange rate could ease tomorrow if the UK public sector net borrowing figure for July confirms forecasts and eases from 6.5 billion to -2.7 billion.   

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