This suggests the pound is back on the defensive again with persistent Brexit jitters stifling Sterling sentiment. Markets continue to wrestle with the prospect of a no-deal Brexit in October as Boris Johnson’s increasingly hard-line stance on Brexit ruffles feathers in the EU. The PM’s calls for the Irish backstop to be scrapped and negotiations to be reopened have been met with an unyielding response from the EU.
Simon Coveney, Ireland’s deputy prime minister told RTE’s Radio One this morning: “There is a consequence to the approach that the British government is taking and that consequence is that they are making a no-deal far more likely.”
Mr Johnson heads to Berlin for a meeting with German Chancellor Angela Merkel today, but with Mrs Merkel expected to firmly rebuff the PM’s proposals, any hopes for a breakthrough remain slim.
Meanwhile, Italy’s political crisis remains in focus for EUR investors.
Yesterday saw Italian Prime Minister Giuseppe Conte resign his post, handing his mandate back to President Sergio Mattarella.
This scuppered interior minister Matteo Salvini’s plans to hold a no-confidence vote and force a snap election in which his right-wing League would likely emerge as the single largest party.
With an Italian election averted for now, markets seem content to leave the euro static for the time being.
Coming up in the second half of the week we have the Eurozone’s latest PMI figures.
This could provide some respite for the GBP/EUR exchange rate on Thursday as another month of lacklustre growth in the bloc’s private sector increases expectations for a September stimulus package from the European Central Bank (ECB).
Potentially undermining Sterling’s recovery could be Mr Johnson’s face-to-face with French President Emmanuel Macron.
The meeting is likely to be a tense affair, with Mr Macron expected to remain resolute in opposing a renegotiation of the withdrawal deal.