Pound Sterling fell 0.2 percent to $1.2833 in early morning trading, but according to Bloomberg, had recovered to $1.2886 by 2:45pm. Against the euro, the British currency has remained relatively unchanged, rising slightly to €1.1411 from an opening price of €1.14. The pound had plummeted against both currencies yesterday after it was revealed the UK economy grew at its slowest rate last year since 2012.
The pound continues to remain volatile against both currencies as Brexit uncertainties continue to dominate the markets.
Investors are looking for more clarity, with the political turmoil weighing on consumer and business sentiment.
CMC Markets analyst Michael Hewson said: “Further delay is unlikely to be welcomed by business, however the Prime Minister appears determined to push her deal to the wire, given the lack of a parliamentary majority for any other options.
Pound LIVE: Sterling could be set for major movement throughout the day
It is very difficult to argue with the notion that Brexit related uncertainty has now had a significant economic impact
“This continued brinkmanship has seen the pound slip to a three week low against the US dollar.”
Rabobank analysts said in a note: “It is difficult to determine exactly how much of this is related to UK politics and how much is a function of the slowdown elsewhere,” Rabobank analysts said in a note.
“That said, it is very difficult to argue with the notion that Brexit related uncertainty has now had a significant economic impact.”
Meanwhile, business minister Richard Harrington warned a hard Brexit would be a “disaster” for the UK economy as he urged MPs to back Theresa May‘s deal.
Pound LIVE: Sterling has recovered strongly against the US dollar after falling to a three-week low
This came after Labour members urged the Government to take a no-deal Brexit off the table to protect the UK’s manufacturing sector, which has “collapsed into recession territory”.
On Monday, figures from the Office for National Statistics showed GDP grew by 0.2 percent in the fourth quarter of 2018 compared to 0.6 percent in the previous three month period – the lowest level of growth since the start of last year.
Annually, GDP grew 1.4 percent, but this was the weakest it has been since 2012.
Following the release of the gloomy data, the pound plummeted 0.24 percent against the euro to 1.1405 before staging a recovery during the afternoon.
Pound LIVE: Sterling has held firm against the euro
Mrs May provided Parliament with an update on the Brexit process today as she fights to win more concessions for her deal from the European Union – primarily around the Irish backstop.
A Brexit debate will take place in the Commons on Thursday, with Mrs May hoping to bring back a more favourable deal to MPs by February 27.
Britain is on course to tumble out of the EU on March 29 without a deal unless the Prime Minister can can convince the bloc to reopen the divorce deal she agreed in November before selling it to sceptical MPs.
She said: “The talks are at a crucial stage.
“We now all need to hold our nerve to get the changes this House has required and deliver Brexit on time.”
Pound LIVE: Theresa May urged MPs to ‘hold our nerve’ as she strives for concessions with Brussels
Prior to her speech in the Commons, Mrs May confirmed to her Cabinet the meaningful vote on her Brexit deal will be delayed.
In a statement, Number 10 said: “The PM updated cabinet on the talks with the EU and the statement she will deliver to MPs this afternoon.
“The PM said that in Brussels last week she had set out the need for legally binding changes to the backstop and had outlined the ways we thought this could be achieved – alternative arrangements, a time-limit or a unilateral exit mechanism.
“She said it is clear that these discussions with the EU will need a little more time to conclude and so we will not be bringing forward a meaningful vote this week, but will table an amendable motion for debate on Thursday.
“We will also commit to laying another amendable motion for debate by 27th February if a meaningful vote has not been passed by then.
Pound LIVE: Michel Barnier said the EU would tweak the political declaration on EU-UK ties
“In the meantime, we will continue to progress the work on workers’ rights, the role of parliament in the next phase of the neg
The EU has so far refused to reopen the Brexit divorce deal, despite Mrs May insisting she can get legally binding changes to replace the current proposal for the Irish border.
The Prime Minister said in the Commons today: “By getting the changes we need to the backstop; by protecting and enhancing workers’ rights and environmental protections; and by enhancing the role of Parliament in the next phase of negotiations I believe we can reach a deal that this House can support.”
On Monday, EU chief Brexit negotiator Michel Barnier said the bloc would agree to tweak the political declaration on EU-UK ties after Brexit that forms part of the package to reflect a plan for a closer future relationship that would eliminate the need for a continuous backstop.
Mr Barnier said: “It’s clear from our side that we are not going to reopen the withdrawal agreement but we will continue our discussion in the coming days.”
The Bank slashed this year’s growth forecast to 1.2 percent – the lowest since 2009, when the economy slumped 4.2 percent at the height of the recession.
This shock downgrade compares with 1.7 percent predicted in November, while the Bank has also cut its outlook for 2020 to 1.5 percent.