Brexit continued to cast a long shadow over Sterling this week, with the various twists and turns in the Brexit saga resulting in some significant volatility in GBP/EUR.
Pound Volatile as Brexit Continues to Dominate Sentiment
Trade in the Pound remain erratic this week as the Brexit headlines continued to come thick and fast.
This volatility was mostly focused in the second half of the week, being kicked off on Wednesday as GBP/EUR climbed to a fresh 22-month high on Wednesday after Theresa May’s offer to resign as PM helped to win over rebel Tory’s to support her Brexit deal.
Sterling quickly fell back again however after MPs were unable to agree on a way forward for Brexit after a series of indicative votes.
This was followed by further swings in the Pound through Thursday and Friday as May’s divorce deal was put forward for yet another vote, driving yet more uncertainty in Sterling.
Meanwhile, the Euro struggled through the first half of the week as it was undermined by a dovish speech from European Central Bank (ECB) President Mario Draghi in which he warned that the risks to the Eurozone have grown in recent months as global conditions continue to deteriorate.
However the single currency found support in the latter half of the week as concerns over a slowdown in Germany were offset as German unemployment fell to a new record low in March.
Sterling to Fluctuate on Further Brexit Uncertainty?
Unsurprisingly Brexit is likely to remain the main catalyst of movement in the Pound next week
Outside of Brexit we may see the release of the UK’s latest PMI figures apply some pressure to Sterling through the first half of next week as well, if they show that growth in the UK’s private sector continued to slow in March.
Meanwhile, EUR investors are likely to be focused on the Eurozone’s latest CPI figures at the start of next week, with the Euro likely to struggle if inflation continued to slow this month.
This will be followed by the publication on Germany’s latest industrial data in the latter half of the session, which could further knock the single currency if another gloomy reading further fuels speculation of a prolonged slowdown in the Eurozone’s largest economy.