Sterling has recently been devalued by political developments relating to Brexit, specifically over whether the country aims for EU single market access.
Trade Secretary Liam Fox will give a speech calling EU single market membership “a sellout of Britain’s national interests”, but a former trade department official has already criticised this stance.
Claiming that UK-EU negotiations are an unequal trade-off, Sir Martin Donnelly said: “You’re giving up a three-course meal, the depth and intensity of our trade relationship across the European Union and partners now, for the promise of a packet of crisps in the future.
“[That’s] if we manage to do trade deals in the future outside the EU, which aren’t going to compensate for what we’re giving up.”
Another factor lowering confidence among pound traders has been Scottish Minister Nicola Sturgeon’s rejection of the latest devolution deal from the UK government.
Mrs Sturgeon has taken a defiant stance.
She said: “After Brexit, in terms of the devolution settlement, powers should return to the Scottish Parliament and it should be up to us how we exercise them.”
This attitude raises the risk of the approval of an amendment to the Government’s trade bill by the SNP, Labour and Conservative rebels, when it is voted on next week.
On the other side of the currency pairing, the euro has remained stable against the pound thanks to better-than-expected confidence scores for February.
Although reported levels of optimism have fallen, the various Eurozone indexes haven’t touched the lowest predicted figures.
Looking ahead, the pound to euro exchange rate may be affected by the content of Trade Secretary Liam Fox’s upcoming ‘Road to Brexit’ speech.
Whether the UK remains in “the” or “a” customs union with the EU after Brexit is a hot button issue, so Mr Fox’s views on the matter could cause major GBP movement.
Previews of the speech suggest that Mr Fox will reject the idea of strong trade ties to the EU after Brexit.
If this concerns GBP traders then the pound to euro exchange rate could slide.
On Wednesday, Sterling could also be weakened if the GfK consumer confidence reading for February shows a decline as predicted.
The next high-impact Eurozone news will come this afternoon, when German inflation rate estimates for February will be released.
The base annualised figure is predicted to show a slowdown in February, which could weaken the euro.
Germany is the largest individual economy in the Eurozone, so slowing inflation here could lead to a euro-weakening overall inflation rate decline.