Pound Sterling was up 0.10 percent against the euro to €1.1529 at 8.30am according to Bloomberg, having plummeted to €1.1504 just an hour earlier. The British currency made even bigger gains against the US dollar, rising 0.24 percent to $1.3084 following a steady start in early morning trading. The pound has started the week against the euro close to where it ended the previous week, remaining steady for four consecutive days of trading.
The latter carries the risk of Parliament voting to take control of the Brexit process, possibly forcing the government to extend Article 50, if Mrs. May has nothing to show from the latest round of talks with Brussels. Either way, the pound appears to be
Raffia Boyadjian, a currency analyst at XM.com, warned the pound will continue heading towards volatility unless there is more clarity over Brexit.
He told poundsterlinglive.com: “If the Prime Minister, Theresa May, manages to secure legal assurances from the EU on the Irish backstop, there will likely be a meaningful vote on the revised deal.
Pound LIVE: Sterling has recovered after collapsing in early morning trading
“But if UK-EU negotiations have not been completed by then, MPs could simply vote on an amendable motion on how to proceed next with Brexit.
“The latter carries the risk of Parliament voting to take control of the Brexit process, possibly forcing the government to extend Article 50, if Mrs. May has nothing to show from the latest round of talks with Brussels.
“Either way, the pound appears to be headed for more volatility.”
It could be yet another key week for the pound, with the release of more important data painting a clearer picture as to how Brexit uncertainty is affecting UK manufacturing.
Pound LIVE: Sterling has made some gains on the euro following a disappointing start
On Friday, the IHS Markit Manufacturing PMI for February – a survey-based activity indicator – will be released.
This is forecast to show a drop to 52.0 from 52.8 in January.
The GfK Consumer Confidence Survey is also released on Thursday, and is forecast to show a -15 result from -14 previously, primarily driven by Brexit uncertainty.
Pound Sterling Live said an even bigger-then-predicted slump could have negative repercussions for the pound since declines in sentiment indicators usually precede falls in the economy.
Pound LIVE: Sterling has also made significant gains against the US dollar
On Sunday, it was revealed Brexit could be delayed until 2021 under new plans being plotted by senior EU officials.
Brussels is planning to tell Mrs May if she doesn’t get her Brexit deal through Parliament and wants to delay Brexit, the UK will have to remain in the bloc until at least 2021.
Three Brussels insiders claimed senior figures and governments are backing an extension of as much as 21 months beyond the proposed March 29 deadline.
One EU diplomat said: “If leaders see any purpose in extending, which is not a certainty given the situation in the UK, they will not do a rolling cliff-edge but go long to ensure a decent period to solve the outstanding issues or batten down the hatches.
“A 21-month extension makes sense as it would cover the multi-financial framework the EU’s budget period and make things easier.
Pound LIVE: Theresa May met European Council President Donald Tusk on Sunday
“Provided leaders are not completely down with Brexit fatigue, and a three-month technical extension won’t cut it, I would expect a 21-month kick of the can.
“It is doing the rounds in Brussels corridors.
“Martin Selmayr, the European Commission’s secretary-general, among others, also fond of the idea.”
But Downing Street officials have also drawn up plans which will make a formal request to Brussels to delay Brexit for just two months if Mrs May can’t get Parliamentary backing for her deal by March 12.
The Daily Telegraph reported the plans do not specify the length of the extension, but ministers believe it will be no longer than eight weeks, and as a result, the UK would not participate in the upcoming European Parliament elections.
Number 10 has drafted a series of options looking to avoid resignations by ministers supporting taking a no deal off the table this week.