This comes as the European Union’s Chief Brexit Negotiator, Michel Barnier, warned Conservative leadership candidates that Theresa May’s Withdrawal Agreement is not up for renegotiation. In an interview for the New York Review of Books, Mr Barnier said: “If the UK wants to leave in an orderly manner, this treaty is the only option. If the choice is to leave without a deal – fine. If the choice is to stay in the EU – also fine.
“But if the choice is still to leave the EU in an orderly manner, this treaty is the only option.
“This is all that our legal constraints allow.”
Mr Barnier’s comments have done nothing to help Sterling sentiment as many leadership contenders have expressed that they would be willing to leave the EU without a deal.
Chancellor Philip Hammond has however said he could never serve in a no-deal Brexit cabinet.
Speaking to Sky News, Mr Hammond said: “I couldn’t support a government policy stance that said as a matter of choice we are going to pursue a no-deal exit.”
Meanwhile, on Wednesday German labour force data revealed that the unemployment rate rose for the first time since 2013.
The German unemployment rate rose to 5 per cent in May, which likely subduing sentiment in the single currency.
Looking ahead to the start of Friday’s session, Sterling could rise against the euro following the release of the latest UK GfK consumer confidence data.
If consumer confidence rises by more than expected in May, the pound could get a boost against the euro – although current expectations indicate that the figures will remain broadly negative.
Meanwhile, the euro could rise later in the morning following the release of the German retail sales figures, which are currently forecast to rebound from the state of contraction they posted in March.