The euro is diving after Italy's prime minister resigned

LONDON - The euro is slipping against both the pound and dollar on Monday morning after Italy's prime minister announced he is stepping down.

Matteo Renzi announced his resignation on Sunday evening after losing a referendum on constitutional changes that he had staked his career on.

Renzi said in his resignation speech: "Italy has chosen. Now it's up to those who won to make proposals."

While Renzi's loss and resignation is not a shock - it had looked like he was heading for defeat in the run-up to the vote - it means more instability and uncertainty for Europe.

The euro is suffering as a result. It is down almost 1% against the dollar at close to 7.00 a.m. GMT (2.00 a.m. ET):

The currency is also down against the pound, although not as badly:Kathleen Brooks, the research director at City Index, says in an email on Monday morning: "The euro initially plunged to a low of 1.0506 on the back of the result of this vote, to its lowest level since 2015. However, there have been some early signs of stabilisation in the FX market since Renzi announced that he is resigning.

"Could there be a Trump moment for markets? And after an initial sell-off, selling pressure could start to ease."

However, the euro's performance will most likely be determined by the performance of Italian banking stocks once stock markets open. Senior banking officials were worried ahead of the vote that a "No" vote could lead to the failure of as many as eight Italian banks.

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