Are we heading towards a UK General Election and / or Second Referendum?

Are we heading towards a UK General Election and / or Second Referendum?

The Pound has seen its value dip against the Euro this morning, losing almost half a cent during early morning’s trading.

Why is the Pound weakening?

The Pound is now floating just above 1.15, having failed to make any significant inroads against the Euro since last week’s gains were eliminated.

The Pound had seen its value improve off the back of an apparent breakthrough in cross-party Brexit talks at the beginning of last week, but subsequent reports have indicated this not to be the case, with the Conservatives and Labour still at an impasse.

The Pound has been steadily sold-off by investors since this juncture and has now lost over two cents from last week’s highs.

How could the European elections affect exchange rates?

With European elections on the horizon, we could be set for further market volatility. With Nigel Farage’s Brexit Party gaining increasing support, are the UK’s political parameters likely to change as we head towards a new dawn?

In truth, the outcome of these may have little bearing on the UK’s future political landscape but still have the capacity to affect investors risk appetite for the Pound, which in turn could impact the value of GBP/EUR over the coming weeks.

Looking at the current levels and they remain within the recent range, which has seen the GBP/EUR exchange rate remain fairly docile over recent months.

Any aggressive upturn for the Pound is likely to be linked to a prospective breakthrough in Brexit talks.

To try and facilitate this breakthrough, the Prime Minister has sent her Chief Brexit negotiator Olly Robbins to Brussels to discuss changes to the political declaration on the UK’s future relationship with the EU.

This move is intended to meet a key Labour demand in the cross-party talks. With senior Tory and Labour MPs writing to Theresa May and Jeremy Corbyn respectively, requesting that the talks be abandoned, any breakdown could cast further uncertainty over the final outcome of Brexit.

With very failure to find common ground over Brexit, whispers of a second referendum or a possible general election continue to gather pace.

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