The pairing stabilised following comments from Theresa May, who blamed the Conservative Party’s failure to deliver Brexit as the reason for their poor performance in the EU parliamentary elections, while hoping that her successor would find a “consensus”. Mrs May said during her final visit to Brussels as Prime Minister: “Of course the European election results were deeply disappointing for the party. “What it shows is the importance of actually delivering Brexit.” Meanwhile, Jean-Claude Juncker, the President of the European Commission, has said he remains “crystal clear” that “there will be no renegotiation” over the UK-EU withdrawal agreement.
Sterling traders have become more jittery over the uncertainty surrounding Brexit, and with Mrs May due to resign by 7 June, the question of the Conservative Party’s new leadership is haunting UK markets.
Fears are rising that a hard-Brexiter, such as the former Foreign Secretary Boris Johnson, could become PM.
The euro, meanwhile, steadied following the publication of the French GDP figures for the first quarter today, which held steady at 0.3 per cent.
These were follow by the French producer price figures for April which slipped to a worse-than-expected -0.6 percent against the expected 0.2 per cent increase.
The German unemployment rate figures for May, however, increased above forecast to 5.0 per cent, leaving many single currency investors remaining cautious.
Italy is becoming a drag on confidence within the Eurozone as tensions continue to grow between Brussels and Rome following the EU elections in which the controversial Deputy Prime Minister, Matteo Salvini, won overwhelming support.
David Madden, an analyst at CMC Markets UK, commented: “The EU has warned the Italian government they could be fined… for failing to curb their debt levels, and Italy’s joint Deputy Prime Minister Matteo Salvini declared he will use all his energies to fight the EU’s rules.”
In the absence of any data releases Sterling will likely remain fixated on political developments today, and with the UK leadership and Brexit remaining in a state of uncertainty this is likely to continue to weigh on sentiment in the pound.