Pound plunges to 10-year low against euro

Sterling pares back some losses as turmoil in Italy deepens but remains perilously close to all-time low against single currency

What moves currency markets?

The pound plunged to a 10-year low against the euro early on Monday morning before recovering some of its losses amid turmoil in the eurozone.

Shock news on Friday that the UK economy shrank 0.2 per cent in the latest quarter, alongside increasing fears surrounding an imminent no-deal Brexit, helped to drag sterling to €1.0724, its lowest level against the euro since the financial crisis and close to its all-time low.

The pound began to claw back some ground, helped by Italy’s political problems which dragged the single currency downwards.

Italy’s right-wing deputy prime minister Matteo Salvini threatened to bring down Italy’s coalition government by withdrawing the seven ministers belonging to his far-right Five Star Movement.

Despite those ructions the pound could make few gains on the euro, trading 0.18 per cent up at €1.076 at the end of the London session. Sterling rose 0.3 per cent against the dollar to $1.207.

Sterling may have received some support from the news that a cross-party group of MPs is meeting to discuss ripping up the Commons rulebook in a bid to prevent Boris Johnson pushing through a no-deal Brexit on 31 October.

Senior figures involved in the conversations believe the most likely chance of success would be a bill compelling the prime minister to seek an extension from the EU if there is no deal in place by Halloween.

Brexit remains the major driver behind sterling’s movements but the latest economic data on wages, due on Tuesday, will also be closely watched.

Connor Campbell, financial analyst at Spreadex said: “Desperately searching for a bit of good news, the pound will be praying for a strong wage growth figure on Tuesday, even if any positive headlines not related to Brexit are merely a plaster where emergency surgery is needed.”

Wages have provided one of the less gloomy economic indicators in recent months, with pay rises outpacing inflation giving households a boost after years of stagnation.

In the markets, the FTSE 100 closed 0.4 per cent higher at 7,226.72. On Wall Street the Dow Jones dropped more than 130 points after the opening bell after Goldman Sachs warned of the rising risk of a US recession as trade tensions with China become increasingly hostile.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Please enter a valid email
Please enter a valid email
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Please enter your first name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
Please enter your last name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
You must be over 18 years old to register
You must be over 18 years old to register
Opt-out-policy
You can opt-out at any time by signing in to your account to manage your preferences. Each email has a link to unsubscribe.

By clicking ‘Create my account’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in