February’s Eurozone Consumer Price Index performed as forecast, with the annual figure rising by 1.5 percent. Inflation in February rose by 0.3 percent after contracting by -1 percent in January. This was the largest monthly increase since September 2018, which likely provided the single currency with further support. Last night, the House of Commons voted to seek an extension to Article 50 and delay Brexit beyond 29 March.
Prime Minister Theresa May said that Brexit could be delayed by three months, with the UK leaving the European Union on 30 June.
Nevertheless, Mrs May warned that extending Article 50 by longer than three months could harm trust in democracy as it would mean the UK would have to take part in European Parliament elections in May.
In the coming days, the Prime Minister is set to attempt to persuade MPs for the third time to back her Brexit deal.
MPs are to have a third “meaningful vote” next week, which is expected to take place on Wednesday.
If this vote is rejected for the third time, the government has signalled it could result in a long delay to Brexit depending on EU-27 approval.
An extension would need the “unanimous agreement” from all EU member stated, and would be for the leaders of those states to “consider such a request, giving priority to the need to ensure the functioning of the EU institutions and taking into account the reasons for and duration of a possible extension.”
Donald Tusk, the European Council President, said that EU leaders could be open to a long extension “if the UK finds it necessary to rethink its Brexit strategy.”
Looking ahead to next week, Sterling could slide against the euro on Tuesday following the release of January’s average earnings.
If average earnings excluding bonuses dip from 3.4 percent to 3.3 percent, sentiment in the pound could fall.
However, the euro could slide against the pound later in the morning following the release of Germany’s ZEW economic sentiment survey.
If economic sentiment slides further, from -13.4 to -14 as forecast, this could weigh on the single currency.