The Pound appreciated last week, with an upswing in Brexit optimism leading GBP/EUR to climb from €1.14 to a high of €1.15, the pairing’s best levels since the end of January.
Pound Rallies on Brexit Optimism
The Pound found its footing again last week, climbing against the Euro and the majority of its other peers on the back of fresh Brexit optimism.
The upswing in Sterling took place on Tuesday, with the GBP/EUR exchange rate appreciating around a cent following comments from Junior Business Minister Richard Harrington, in which he suggested that a no-deal Brexit remains unlikely as he expects parliament to gain control of the process in the immediate future.
This helped to offset the publication of the UK’s latest labour report at the start of the week, which saw the pound stall after the release of some softer-than-expected wage growth figures.
Meanwhile the Euro struggled to find momentum last week as investors remained wary of the single currency amid ongoing concerns over a slowdown in the Eurozone economy.
This was not helped by the release of the Eurozone’s latest PMI figures, which saw a surprise contraction in the bloc’s manufacturing sector briefly propel EUR/GBP to its worst levels since January.
Sterling to Accelerate if Parliament Takes Control of Brexit?
The main catalyst for movement in the GBP/EUR exchange rate for the coming week will undoubtedly be the House of Common’s next Brexit vote, scheduled to take place on Wednesday.
This could see the Pound surge if MPs back efforts to wrest control of the Brexit process away from the government and extend Article 50.
Outside of Brexit, the only UK economic data of note will be the release of the UK’s latest manufacturing PMI on Friday, with Sterling potentially weakening if growth in the UK’s factory sector continued to slow this month.
Meanwhile the Euro may come under pressure on Wednesday if the Eurozone’s latest economic sentiment index indicates that confidence in the bloc continued to weaken in February.
However the main focus for EUR investors is likely to be the release of the Eurozone’s CPI figures on Friday, with the single currency potentially struggling if inflation remained weak this month.