Weak data along with increasing uncertainty as to when the UK government will officially begin the Brexit process weighed on Sterling’s value yesterday, with the GBP/EUR exchange rate dropping to its lowest level in 7 weeks.
There are currently ongoing discussions within parliament’s upper house regarding the terms of the Brexit and the wording involved in the official triggering of Article 50, and the uncertainty is weighing on Sterling’s value as we’ve seen on a number of occasions since the UK electorate voted in favour of the Brexit.
The Pound does now appear to be less sensitive to political headlines than in previous months, but I think investors would prefer to see some more certainty and I think that once financial markets are aware of the dates involved in the imminent Brexit, the pressure on the Pounds value may ease.
Just a few weeks ago the Pound hit its highest level against the Euro in 2017 so far, and this was due to Marine Le Pen gaining popularity within opinion polls in France as many investors are concerned her policies would be detrimental to the French/Eurozone economy. Those hoping for further Euro strength should pay close attention to this topic as it could impact the Euros value in the upcoming weeks.
There is a lot of data out of the Eurozone this week with Thursday being the busiest in terms of releases. There will be an interest rate decision and a statement on monetary policy so a bullish European Central Bank later this week could push the Pound lower and perhaps below the 1.15 threshold at the mid-market level on GBP/EUR.
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