Heighted Brexit uncertainty saw trade in the Pound sour this week, with GBP/EUR touching a new three-week low as markets feared the risks of a no-deal Brexit were on the rise again.
Pound Sinks as Brexit Uncertainty Grows
The Pound’s fortunes began to turn again this week, with the UK currency relinquishing some of its recent gains as the Brexit saga rolled on without a clear conclusion in sight.
Sterling sentiment nosedived through the first half of the week as Theresa May was denied a third vote on her Brexit deal, before then announcing she would only seek a short extension to Brexit, much to the disappointment of GBP investors.
However the GBP/EUR exchange rate eventually rallied after EU leaders agreed to delay the Brexit beyond 29 March, although not enough to prevent Sterling from closing the week lower.
Meanwhile, while the Euro strengthened against the Pound through most of the session, it was forced to part with some of its gains at the end of the week, following the release of the Eurozone’s latest PMI figures.
The data revealed growth in the bloc’s private sector continued to weaken in March, with a larger-than-expected contraction in the Eurozone’s manufacturing sector prompting speculation that GDP may have slowed sharply in the first quarter.
GBP Investors Not Holding Out Hopes for Third Brexit Vote
After being denied a vote this week, Theresa May will hope that the EU’s terms for a delay is enough to allow her to hold a third vote on her withdrawal deal next week.
However the chances of the PM getting her deal through parliament remains slim, and another rejection of the deal is likely to result in further volatility in the Pound as Brexit uncertainty flares up once more.
In terms of the Euro, it too is likely to continue to feel the sting of Brexit uncertainty throughout the week.
However the single currency may be offered some respite with the release of a slew of German economic data throughout the session, with EUR potentially strengthening if economic activity in the Eurozone’s largest economy begins to show some signs of picking back up.