The exchange rate has dipped to €1.128 down from €1.132 yesterday.

Sterling is struggling in response to disappointing data out of the UK, and criticism over Brexit negotiations.

Yesterday the pound fell after the worst construction results since immediately after the Brexit vote.

Building output contracted in September with a Markit/CIPS construction PMI reading of 48.1 – a figure below 50 indicates the sector is shrinking.

Pound euro exchange rate

Pound euro exchange rate: Sterling has dipped after a warning from the EU over Brexit

Another disappointing UK report sent the pound lower against the euro

Laura Parsons

TorFX currency analyst Laura Parsons said: “Another disappointing UK report sent the pound lower still against the euro on Tuesday.

“The UK’s construction sector was shown to have unexpectedly entered contraction territory last month and the news added to concerns that UK economic output slowed in the third quarter.”

Further hampering the exchange rate were comments made by the EU’s chief Brexit negotiator Michel Barnier yesterday.

Speaking about Brexit talks thus far, Mr Barnier said: “Today we have not yet achieved sufficient progress to begin in full confidence the second phase of negotiations.

Pound euro exchange rateBLOOMBERG

Pound euro exchange rate: Sterling is buying €1.128

“There are still serious divergences, in particular on the financial settlement.

“We will not agree to pay at 27 [EU members] what was decided at 28.”

Fresh data out of the UK could send the exchange rate either way.

If today’s services figures fail to meet expectations, the euro will likely climb.

Pound euro exchange rate

Pound euro exchange rate: Sterling remains volatile to Brexit talks

Ms Parsons said: “GBP/EUR is currently trading in the region of €1.127 and could fall even further if today’s all-important UK services PMI comes in below forecast.”

Sterling was hit earlier this week by disappointing manufacturing data.

The PMI proved poor, fueling concerns about the UK’s growth prospects.

Activity in Britain’s factory sector tumbled in September, with the manufacturing index sliding from 56.9 to 55.9.

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