Italy has once again become a source of frustration for European economists and investors. The EU already had an uneasy relationship with Italy’s anti-establishment coalition government, strained by budgetary disagreements last year. Yesterday Matteo Salvini announced that he is calling preliminary elections again. He is hoping that this time around his Lega party will gather more decisive support. However, it is also possible that this makes the political crisis in Italy worse. As a result, the euro weakened yesterday. Today it seems to have recovered slightly, but we need to keep an eye on the issue.
The European single currency is also pressured by disappointing fundamental reports. Earlier this week Germany delivered poor reports on industrial production levels. Now France has also reported a drop in their own report, showing the two most powerful economies in Europe are having a rough time.
Meanwhile, the British pound is crashing under the weight of a likely no-deal Brexit. Just hours ago the UK GDP data for the second quarter was released and it was just 1.2% against the forecasted 1.4%, which was already down from the previous reading of 1.8%. It’s bad news all around for the UK, made not the least bit better by rumors that Johnson is planning a general election in November.
