Italians throw spanner in works

As we head into party season the pound jumped on the festive spirit bandwagon as it reached its highest levels against the euro for 3 weeks. Following the announcement of Italian Prime Minister Mario Monti to resign, the 12 bloc currency came under immense selling pressure as it seems investors are concerned over the political stability of an already debt pressured eurozone nation. In recent weeks we have seen the euro strengthening as deal surrounding both Greece and Spain seemed to have paved the way for a eurozone recovery but it seems the Italians have now thrown another spanner in the works.

Against the Dollar the pound remained fairly subdued. Strong recent US data has helped the Dollar but with ongoing ‘fiscal cliff’ talks it remains to be seen whether or not USD strength can continue. The story here isn’t really about GBP/USD as for some months now the GBP has reacted to the movement in the EUR/USD pairing and with the Euro weakening it will be no surprise to see the pound strengthen against the euro and weaken against the dollar.

Very little data of interest in the UK and States today but the German ZEW survey is due for release later this morning. The survey details the economic sentiment within the eurozone’s largest economy and if Germany starts to waver there could be further trouble ahead for the euro. To make sure you don’t miss out on a favourable rate of exchange please do keep in contact with your account manager here at Currency Index.