The pound is currently trading against the euro at €1.133, dropping from yesterdays figures of €1.137.
Last week, the exchange rate reached a six-month high after the Brexit negotiation progression, in which the divorce bill was settled as well as the contentious topic of the Irish border.
The drop comes in spite of the “new sense of optimism” Prime Minister Theresa May felt the nation had reached regarding leaving the EU.
It is hoped that the pound could begin to recover after the release of the UK inflation data later today.
Inflation is set to hold steady with October rates, which reached 3 per cent.
The Office for National Statistics (ONS) will release the data later today, with experts hoping it will hold steady for November or to drop slightly.
The Bank of England raised rates for the first time in almost a decade to try and tackle the rising inflation problem but expects it to be slow progress.
A survey by Bloomberg has found that economists expect to see inflation fall to 2.3 per cent by the end of 2018.
Rising inflation is also causing a pinch for households as food prices increase whilst wage growth continues to stall.
Food prices were up by 0.6 per cent meaning UK families face a more expensive Christmas this year.
Britons wages are set to drop by 0.5 per cent by next year as they struggle to keep up with inflation rates.
This makes the UK one of the worst places in the world for pay increases in 2018 as it falls behind the average of 1.5 per cent increase, according to LA recruitment firm Korn Ferry.
Laura Parsons, currency analyst at TorFX commented on the exchange rate and how it will be affected
She stated: “Although Prime Minister Theresa May asserted that last week’s exit deal had given Brexit negotiations a new sense of optimism, the Pound still spent Monday drifting lower against most of the majors.
“GBP/EUR is currently trading in the region of €1.133 but Sterling could bounce higher today if U.K. inflation data surprises to the upside and the ZEW economic sentiment survey shows a decline in confidence.”
