The British pound was lower against other major currencies during the start of the week. This comes in particular amid doubts surrounding Brexit, which have had a significant impact on sentiment.
The pound is still weak this morning as the GBP / EUR settled at 1.1604, the GBP / USD fell at $1.3078 and the GBP / CAD was trading at $1.7388. Meanwhile, GBP / AUD and GBP / NZD remained flat at AUD1.8300 and NZ $1.9372 respectively.
Brexit is likely to continue to be the driving force behind the pound as GBP investors focus on Teresa May’s flights to Berlin and Paris in an attempt to sell her demand for a delayed Brexit.
The British pound fell at the start of this week’s session as the UK’s exit plan from the EU continued to undermine investor confidence.
Markets remained particularly cautious from the GBP this week ahead of the EU summit on Wednesday, in which EU leaders will decide whether to give the UK another extension for Brexit.
The weakness in the pound was exploited to the best possible extent by the euro, which benefited from a broad rally on Monday, weakening the GBP / Eur exchange rate by about half a cent despite some terrible trade figures from Germany, which showed a sharp decline in exports and imports in February.
At the same time, the GBP / USD pair was able to avoid losses yesterday as the US dollar faced some pressure after it was found that US factory orders fell in February after a recession at the beginning of the year.
What is going to happen next?
In today’s main events, the focus will be on Teresa May’s flights to Berlin and Paris to try and persuade Angela Merkel and Emmanuel Macron to assist her with her demand for a short extension to Britain’s exit from the European Union.
However, this could lead to a drop in the pound if the British prime minister is not successful, with the two leaders likely to remain reluctant to offer a short extension without further information on how Teresa May plans to deal with the current situation in the Parliament.
At the same time, the USD may find some support this afternoon after the issuing of the latest job openings data in the US. Another strong reading in February will probably help improve confidence levels in the US labor market.
Finally, the euro may face difficulties maintaining its strength today after reports that President Trump is considering imposing a $11 billion tariff on EU goods, including French cheese and wine.