European Union finance ministers agreed to pursue plans to penalise Italy with a £3bn fine. During a meeting last week, the ministers confirmed that Italy’s high debt level contravenes EU rules, causing the European commission to take further steps to punish the count. As well as the ongoing budget dispute, it looks like Italy appeared more likely to leave the euro area than anyone else after a proposal to create mini-Bills of Treasury, or mini-BOTs, a parallel currency to run alongside the euro and be used by the Government to finance its debt obligations.

Currency Pair% Change (Month)Difference on £200,000
GBPEUR2.22%€5,085

Deputy Prime Minister Matteo Salvini, who heads up the League party, this week went as far as saying: “We don’t need to ask Germans, Spanish and Luxembourgish for money. “We want to use Italians’ money for Italians.” This is now a main cause for concern in the eurozone as the EUR/USD interbank rate took a turn into the weekend and have continued to bounced at 1.12 level.

Europe's unified unit has endured multiple chinks in the armour in its fortune over recent quarters, with the latest coming after the European Central Bank (ECB) June assessment of the Eurozone's economic outlook was perceived as being less downbeat than what the market had expected. Through global demand issues and slowing domestic economies. Financial markets had been betting the ECB would change its interest rate before long, Mario Draghi suggested only that policymakers are now likely to wait a bit longer before raising borrowing costs for companies and consumers. Adding they have all the necessary tools in the toolbox to deal with upcoming issues.

The decline in the pound is widely attributed to increasing odds of a 'no deal' Brexit taking place on October 31st following the failure of Theresa May's Brexit deal to pass through parliament, and her subsequent resignation. Analysts at Danske Bank have commented by saying a combination of weaker domestic data, global risk sentiment and ECB policy will play a part in a softer GBP/EUR exchange rate going forward. There have been fears that “non-Brexit drivers to weaken the GBP further over the summer."

German data expected to show sign of struggling economy

German data expected to show signs of struggling economy

It seems that every month forecasts and data for the German Economy come under scrutiny. With tomorrow have Leibniz Centre for European Economic Research (ZEW) Surveys for Economic Sentiment and Producer Price Index for MoM and YoY, both expected to show a drop of 0.4%, With figures expected at 0.1% and 2.1% respectively.

Also tomorrow, the European Consumer Price index (CPI) inflation figures will be expected to stay mostly unchanged but the MoM figures are expected to have fallen to 0.3% from 0.7% in the previous.

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