British Pound Falls as Euro Rebounds from Early Losses

The British pound retreated against the euro on Monday, after touching its highest level in 5 months versus the shared currency. The euro recovered from all of its earlier losses today, which it had recorded following a constitutional referendum in Italy.

Italian voters chose to shoot down amends to the nation’s constitution, which were put forward by Italian Prime Minister Matteo Renzi and his Democratic Party. 59.1% of voters refused the amends in the referendum that was held on Sunday, prompting Renzi to announce his resignation in a news conference later on the same day.

The immediate reaction of financial markets brought the euro to its lowest level against the pound and the dollar since July 2016 and March 2015, respectively. However, the shared currency quickly recovered from all of its losses as currency traders looking to make profits off the currency’s quick drop and climb took an advantage of its rapid movement.

In the United Kingdom, the euro’s drop opened a brief window for importers to buy the single market’s currency that they need to get goods from European producers. Increasing uncertainty about the future road of the British departure from the European Union placed additional pressure on UK businesses to attempt to secure their access to needed services and products from the union.

Recent comments from British and European politicians yielded no clarity about the possibility to maintain UK’s access to the European single market after the country departs. The latest comment came from Secretary of State for Brexit David Davis, who said that the British government could be willing to contribute to the European Union’s budget in exchange for access to its market.

EUR/GBP traded at 0.8468 as of 19:06 GMT on Monday after touching 0.8304 at 04:10 GMT, the pair’s lowest level since July. EUR/GBP opened trading today at 0.8369.

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