The Euro recovered slightly from the recently struck 21-month troughs but remains under some pressure. The common currency clawed back nearly all ground lost in the overnight hours after the Italian government conceded defeat of the referendum which was posed before voters this weekend. As expected, though by a higher majority, Italian voters largely said “no” to the vote which would have ushered in reforms of the banking system. Now, with the Prime Minister conceding and offering his resignation, FX investors are concerned over the future dynamics of the Italian government.

As reported at 10:22 am (GMT) in London, the EUR/USD was down by 0.25% and trading at $1.0633; the pair had earlier hit a session trough of $1.0505, a loss of 1.4%, before recovering slightly. The EUR/GBP was 0.8363 Pence, down 0.19%; the pair’s daily trading range was from a low of 0.8302 Pence to a peak of 0.8398 Pence.

FX Markets Look for New Cues

Analysts say that because the outcome of the Italian referendum was largely anticipated, going forward the FX markets will take cues from the bond market and will await stock markets’ reaction. Furthermore, they’ll look ahead as to how the various ratings agencies will now rate Italy’s sovereign debt. In the near term, markets will also look to see how Mario Draghi and the ECB will react; the ECB will meet later this week for the December monetary policy meeting.