The Euro edged away from the one-year low it slumped to against the Pound after the Italian President asked centre-left leader Matteo Renzi to form a new government, a move seen favourable by the markets.
Mr Renzi helped to oust Enrico Letta who resigned last week after coming under pressure over the lack of economic changes in the country. Mr Renzi questioned the performance of Letta’s government and accused him of failing to implement much needed reforms.
President Giorgio Napolitano asked Renzi to form a new government following a 90-minute long meeting on Monday. Renzi now faces the challenge of forming a new coalition government and naming a cabinet as well as facing a formal vote of confidence in parliament later in the week.
Demand for the single currency continues to be underpinned by last week’s better than expected Eurozone growth data for the fourth quarter of 2013. The report eased some concerns that the European Central Bank could tighten monetary policy at its next policy meeting.
“The ECB is probably happy to remain sitting on its hands. The inflation rate is obviously low and is not expected to change significantly in the coming months, but policy makers are expected to look through short-term inflation developments against the background of slightly improving growth momentum,” said an economist from Nibc Bank NV in The Hague.
The Euro could recover more ground against the Pound on Tuesday if UK inflation data disappoints and the latest ZEW Economic sentiment index reports for the Eurozone and Germany come in strongly.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.3703 ,
Euro,, Pound,0.8189 ,
Euro,,Australian Dollar,1.5177 ,
Euro,,Canadian Dollar,1.5031 ,