Sterling is holding close to opening levels after ending last week higher when Prime Minister Theresa May announced the date of her departure as leader of the Conservative Party. Against the euro this morning, the pound is trading at €1.1335 at 8.17am BST. While versus the US dollar at the same time of writing, Sterling is worth $1.2669. However, the pound is still near multi-month lows against both currencies after last week recording its longest losing streak against the euro since the introduction of the single currency.
ACLS Global analyst Marshall Gittler claimed market data signals that people are buying insurance against a further fall in the pound.
But he added: “Sentiment towards the pound is still negative.”
In main political movements, the weekend was dominated by the results of the European elections rolling in across the continent.
The Brexit Party stormed to victory, securing the most MEPs out of all the other UK parties.
Nigel Farage’s party walked away with 29 MEPs, while the Liberal Democrats claimed 16 and the Labour Party were on 10.
Green secured seven MEPs, the Conservatives four, the SNP three and Plaid Cymru one.
Neil Wilson, chief market analyst at Markets.com, said: “In the UK the centre has given way completely, and the pressure on the pound remains firm.
“The Brexit Party won the day, although the overtly Remain parties did very well with the Liberal Democrats and Greens enjoying a strong bump in support.
“European elections are entirely meaningless of course in terms of the Westminster arithmetic, but the impact on the ruling Tory party is key.”
Speaking of the impended leadership race to replace Mrs May, he added: “A lot is priced in but a no-deal would see further downside for the pound.”
Connor Campbell, analyst at Spreadex, said: “The UK is sort of stuck in limbo, unable to fully move forward with anything Brexit-related until the next Prime Minister is found.
“This was reflected in the pound’s performance on Tuesday.
“Against the dollar it dipped 0.1 percent, slipping back under $1.267 but avoiding last week’s lows, while against the euro it was sat flat at €1.133.
“That there were no real surprises during the European elections also prevented sterling from doing anything too drastic.”