The euro struggled against most of the majors yesterday, following further struggles between the European Union and Italy.

Currency Pair% Change in 1 dayDifference on £200,000
GBPEUR0.46%€1060
Italian Budget deadline today

The situation in Italy has gone from bad to worse from the EU’s perspective, on Friday Moody’s downgraded the Italian credit rating, whilst fears remain over further political uncertainty this week. Despite a more reasonable tone from Italian officials yesterday when asked what would happen if the EU rejected the budget, investors still looked to remove funds from the euro over fears of conflict in the coming weeks.

Despite this, the euro remained strong against the pound yesterday as Brexit continues to cost GBP. Sterling fell across the board yesterday as fears mount that the Irish border issue and disagreements from within the Conservative Party could cost Theresa May her position before the end of the week.

For any clients looking at moving money back to the UK at present, it may be worth doing so sooner rather than later. Any Brexit optimism is likely to push the pound up, as we have seen in the past week and could therefore create a favourable position to buy euros should we see progress this week. While continued fears over a clash between Italy and the EU could cause euro weakness.

Economic data this week

The majority of influential economic data for the Eurozone this week falls on Wednesday and Thursday. Firstly, the Eurozone’s flash Purchasers Managers Index data for October will be released. A slight drop is expected on the whole so we could see the euro trade lower on Wednesday.

On Thursday, the European Central Bank will hold its latest monetary policy meeting. No fireworks are expected at this month’s meeting, however any mention of a change in fiscal stimulus due to the Italian situation is likely to cost the euro.

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