The Pound hit a three-month low on Wednesday as investor sentiment soured on the lack of Brexit progress. Against its peers, the British Pound has become the worst performing currency this week as markets lose hope that Theresa May will be able to get her Brexit deal across the line on her fourth attempt next month.
Brexit Goes Nowhere, British Pound Exchange Rate Hits Three-Month Low
It’s been almost three years since the monumental vote took place, and there’s still no deal in place, despite a Brexit day extension. The risk of a hard Brexit has also increased, with most of Theresa May’s successors seen as hardline Brexiteers. Sterling has tumbled by around 1.2% in five days, a far cry from earlier in the year when it was one of the market’s most impressive performers.
Maximilian Kunkel, UBS Wealth Management Chief Investment Officer for Germany, said:
‘We don’t think it makes any sense at the moment to trade in U.K. government debt. We have become relatively cautious on the U.K. in any case, given no matter what Brexit you’re going to get, in the end the U.K. economy is likely going to suffer from it.’
Meanwhile, Eurozone growth data surprised today, coming in at 0.3% quarter-on-quarter in Q1 on a seasonally adjusted basis, rather than the 0.4% expected. On the year, Q1 jumped from 1.2% to 1.3%.
The rest of the week is relatively quiet for Eurozone and UK domestic data, meaning a lot of the Pound to Euro (GBP/EUR) exchange rate’s movements will be determined by developments elsewhere and political events. The Pound to Euro exchange rate has been trending in the region of 1.1488, hitting highs of 1.1535, and residing at lows of 1.1445. The Pound to US Dollar (GBP/USD) exchange rate has hit lows of 1.2826 in today’s European session, with highs of 1.2923.