Pure FX Blog

17 July 2017

Pound Hits 1-Month High Versus Euro, as Outlook for Brexit Brightens

The pound to euro interbank exchange rate has hit 1.1432 today, its highest in 1 month, or since June 16th, as the odds of a "softer Brexit" have risen. Image credit: Nimalan Tharmalingam.

The pound to euro interbank exchange rate has hit 1.1432 today, its highest in 1 month, or since June 16th, as the odds of a “softer Brexit” have risen. Image credit: Nimalan Tharmalingam.

by Peter Lavelle

Welcome to Pure FX’s latest update of the pound to euro interbank exchange rate.

Sterling shoots up versus the common currency! The pound to euro interbank exchange rate has hit 1.1432 today, its highest in 1 month, or since June 16th.

The pound has strengthened against the euro, because economics watchdog the EY Item Club has said that there’s now a higher chance of a “softer Brexit” for the UK.

In a new report, Peter Spencer, chief economic advisor to the EY Item Club, said that “a softer Brexit should improve the medium term outlook” for the UK, lifting the pound.

In particular, the EY Item Club said that there was a rising chance that the UK would reach transitional and free trade agreements with the EU after Brexit, thereby boosting sterling.

The EY Item Club now forecasts that the UK economy will grow +0.1% faster than previously predicted in 2018, by 1.3%, thanks to the softer Brexit outlook, so helping the pound!

Pound rises, as UK government acknowledges Brexit bill

What’s more, the pound has also strengthened against the euro, because the UK government has acknowledged for the 1st time that it will have to pay a “Brexit bill” to the EU.

Speaking in Parliament, Joyce Anelay, a Brexit minister, said that “the UK has obligations to the EU that will survive the UK’s withdrawal – and these need to be resolved”, lifting the pound.

Mr. Anelay’s comments have lifted the pound, because they tell us that the UK will quickly pay its financial obligations to the EU, lifting the chances of a smooth Brexit and trade deal.

According to analysts at Nomura, “So far the UK’s negotiations with the EU have been nothing like the fanfare of bravado and disaster that was once expected,” thus strengthening sterling.

With all this in mind, the pound to euro interbank exchange rate has hit this 1-month high!

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Please bear in mind, this article is Pure FX’s opinion only and does not constitute advice. Moreover, the exchange rates referred to in this article are the interbank rates, which are the rates at which banks and financial institutions buy and sell currency to each other. Therefore these exchange rates cannot be accessed by individuals or SMEs, and are not the same rates that Pure FX can offer. To get a free exchange rate quote, call us on +44 (0) 1494 671800, or email peter.lavelle@purefx.co.uk.

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