The euro to pound interbank exchange rate remains at 0.9006 today at the time of writing. This is its highest in seven months, or since January 11th 2019.
By comparison, the euro was as weak as 0.8505 against the pound, back on May 6th. So the common currency has since risen by five cents, or by +5.89%.
This rise in the euro may benefit you, if you're a Brit selling property abroad in Europe, or a Eurozone business owner shipping UK goods to your company.
This is because, when you exchange euros for pounds, you could now get a higher sterling total, compared to if you'd transferred money earlier this year.
This would contribute to lift your pound total, when you transfer the funds from the European home sale to the UK, or reduce your international payments costs for your company.
To check the euro to pound interbank exchange rate, visit our Rates & Tools page. Select 'EUR' to 'GBP' to see today's exchange rate and for the last seven days.
Also, to see what's affecting the euro versus the pound, check our EUR to GBP Exchange Rate Updates page. Click on the latest article to see what's influencing the exchange rate recently.
A chief factor why the value of the euro against the pound remains at this seven-month high is because the financial markets remain concerned over the risk of a 'No Deal' Brexit.
However, looking forward, the interbank exchange rate may be influenced by the fact that the UK economy grew more than forecast in May, said official statistics on Wednesday.
Also, the value of the euro against the pound might be affected by the fact that, yesterday, the European Commission reduced its economic growth outlook for the Eurozone for 2020.
Let's take a closer look at these factors that could move the euro to pound interbank exchange rate in the near future. This may help you to decide when to transfer money to the UK.
Euro Rates Today Remain Strong, on 'No Deal' Brexit Concerns
As I mention, a clear explanation why the euro to pound interbank exchange rate is at this seven-month high is because the financial markets remain worried about the possibility of a 'No Deal' Brexit.
In recent weeks, both Boris Johnson and Jeremy Hunt, the candidates to replace Theresa May as Prime Minister (PM), have refused to rule out taking the UK out of the EU without a deal.
In particular, Mr. Johnson, the frontrunner to become PM, has pledged to take the UK out of the EU by the extended deadline of October 31st, "come what may, do or die".
Mr. Johnson has even refused to rule out proroguing Parliament to pass a 'No Deal' Brexit. In this case, Mr. Johnson would shut down the House of Commons, to prevent MPs objecting to his plans, according to The Journal newspaper.
Parliament hasn't been prorogued since the English Civil War in the seventeenth century. It's widely considered an undemocratic manoeuvre, and would spark a constitutional crisis in the UK.
Meanwhile, Mr. Johnson's rival to become Prime Minister, the Foreign Secretary Jeremy Hunt, has promised to pursue a 'No Deal' Brexit, if it looks like a deal can't be done before September 30th.
UK businesses are increasingly raising their objections to the possibility of a 'No Deal' Brexit. This is because the UK has developed close trade ties to the EU since we joined the European Economic Community (EEC) in 1973.
For example, we pay no tariffs to export to the rest of Europe, and there's minimal bureaucracy. A 'No Deal' Brexit puts these advantages at risk.
For example, Sir Richard Branson, the head of Virgin, told the BBC on Wednesday 10th July that a 'No Deal' Brexit would be "devastating" for Virgin.
Mr. Branson warned that "the pound will collapse to parity [one for one] with the dollar if there is a hard Brexit", while "It obviously is going to result in us spending a lot less money in Britain."
This has weakened the pound, because if there's a 'No Deal' Brexit, companies may decide to invest less in the UK. This might mean less technological innovation, fewer new employees, or lower wage increases.
This could weigh down on the UK's future economic prosperity, including lower GDP (Gross Domestic Product) growth. So this risk has pushed lower sterling.
Euro to Pound Exchange Rate May Be Affected, as UK GDP Growth Rebounds
However, looking forward, the value of the euro versus the pound might be affected, by the fact that the UK's economic growth rebounded in May, said official data yesterday.
According to the Office for National Statistics (ONS) on Wednesday 10th July, UK GDP expanded by +0.3% in May. This is well above April's figure of -0.4%, reports the BBC.
In addition, in the three months to May, UK economic activity expanded by +0.3% too. There were increases in all three sectors of Britain's economy, namely services, manufacturing and construction.
In particular, the UK's economic growth rebounded in May, in part because there was an increase in British car production. This follows April's factory plant shutdown.
Rob Kent-Smith, head of GDP at the ONS, said about these figures that: "GDP grew moderately in the latest three months, with IT, communications and retail showing strength."
As a result, economists are increasingly hopeful that UK GDP will have expanded in Q2 2019, between April and June. This is although June's data so far have pointed to a widespread slowdown.
These figures may influence the value of the euro versus the pound, because they suggest that the UK economy remains resilient, even with the Brexit uncertainty.
To be specific, UK unemployment stands at its joint-lowest since the mid-1970s at present, while wages are rising at the fastest pace since the 2008 financial crisis. This may encourage firms and investors.
EUR to GBP Rate Could Be Influenced, as Eurozone Growth Forecast Cut
Also, looking ahead, the euro to pound interbank exchange rate could be affected by the fact that, yesterday, the European Commission (EC) reduced its economic growth forecasts for the Eurozone.
The EC now predicts that the currency bloc will expand by 1.2% in 2019, from 1.9% in 2018. Meanwhile, 2020's forecast has been reduced by -0.1%, to just 1.4% growth, according to trusted financial news source Reuters.
Explaining this decision, the Commission said that the USA's continuing trade uncertainty with Europe is a "major risk", and that there's "elevated uncertainty".
In particular, Germany, the Eurozone's largest economy, will now grow by just 0.5% this year, from 1.4% last year. Meanwhile, Italy, the bloc's third largest economy, is predicted to stagnate in 2019.
Furthermore, the EC also reduced its inflation predictions for the Eurozone for this year and next. Price pressures in the 19 countries that use the euro are now expected to rise by just +1.4% in 2019 and 2020, below previous hopes for +1.5%.
This suggests that the Eurozone's economy remains too sluggish to generate consistently higher price pressures.
The Commission's lower growth and inflation forecasts could encourage the European Central Bank (ECB) to cut interest rates in the near future.
This is because the predictions suggest that the Eurozone needs greater monetary support to prosper. Plus, inflation looks set to stay well below the central bank's target of close-to-but-below 2.0%.
The European Commission's lower forecasts may affect the euro to pound interbank exchange rate, first because they tell us that the Eurozone is struggling to lift its economic momentum.
In addition, if the ECB cuts interest rates or expands its monetary stimulus, this will flood the financial markets with euros. In turn, this might contribute to devalue the euro.
Get A Free Exchange Rate Quote
Get a free exchange rate quote to get a highly competitive exchange rate, and find out how much you could save with Pure FX.
You’ll get a highly competitive exchange rate for your money transfer.
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 [email protected]