The pound is struggling to breakthrough €1.16 and $1.30 this week as the UK currency’s main mover continues to be Brexit. There has been a significant lack of political updates on Britain leaving the European Union this week, which currency watchers suggest could be the reason why Sterling is treading water. As of 9.10am UK time, the pound is worth €1.1580 after rising marginally against the euro. Versus the US dollar, Sterling is at $1.2962.
Michael Brown, senior analyst at Caxton FX, said: “The pound continues to tread water across the board as markets await fresh Brexit news or data to stimulate volatility.
“The week ahead contains several key economic events from the UK, US and eurozone.”
In latest Brexit updates, Prime Minister Theresa May is facing yet another challenge to her leadership after Tory grassroots chiefs forced an emergency summit on whether to demand she should step down, it has been reported.
A meeting of 800 constituency chairmen and women and senior activists is expected to take place in June after enough of them signed a petition to hold an emergency general meeting.
According to The Sun, they will vote on whether to demand the Prime Minister’s resignation for failing to deliver Brexit.
Mrs May has already survived an internal attempt to oust her when backbenchers on the party’s 1922 Committee launched a revolt in December.
Under party rules, disgruntled MPs have to wait 12 months from a failed bid to try again in a fresh vote.
On Tuesday, Foreign Secretary Jeremy Hunt warned against any attempt to get rid of Mrs May before a Brexit deal is passed by MPs.
Mr Hammond told the Daily Telegraph: “The process of a Tory leadership election would inevitably involve candidates setting out their red lines which might itself mean that finding a compromise to get Brexit over the line becomes harder.”
Sterling could be moved this week after the Bank of England meet this Thursday lunchtime.
The BoE is anticipated to keep interest rates the same this week, with analysts suggesting Brexit uncertainty will keep rates on hold until a breakthrough emerges.
This week will also see local elections take place and the release of PMIs for April.
The Manufacturing PMI is out on Wednesday, followed by the Construction PMI on Thursday.
Mr Brown continued: “Markets will look to the monthly PMI surveys for an early gauge of the UK economy’s performance last month, with a modest rebound expected in the services sector while the manufacturing index is likely to fall as the impact of Brexit stockpiling dissipates.
“Thursday’s Bank of England meeting is also on the radar, where focus will fall on the BoE’s latest economic forecasts, with the possibility of a hawkish tilt – with the BoE likely unable to ignore the tightness of the labour market.
“A positive-sounding BoE along with upside surprises to economic data would likely see the pound well-supported throughout the week, though Brexit headlines may derail any rally.”