The euro to pound interbank exchange rate stands at 0.8999 today. This is just -0.01% below its highest since January 10th, or over seven months.
By comparison, back on May 6th, the euro was as weak as 0.8505 versus the pound. So it's since risen by close to five cents, or by +5.8%.
This might be helpful for you, if you're a Brit selling property abroad in Spain, France or Italy, or a Eurozone business owner importing British products.
This is because, when you transfer money to the UK, you might now get a higher sterling total, compared to if you'd exchanged currencies earlier this year.
In turn, this could make it more profitable for you to transfer the funds from your property sale to the UK, or cut your currency for your business costs.
To stay up-to-date with the euro to pound interbank exchange rate, visit Pure FX's Rates & Tools page. Here, select 'EUR' to 'GBP' to see today's rates and for the last week.
Also, to find out what factors are affecting the euro versus the pound recently, visit our EUR to GBP Exchange Rate Updates page. Here, click on the latest article.
A first factor why the euro rates today have neared this seven-month high is because the candidates to become Prime Minister, Boris Johnson and Jeremy Hunt, have ruled out the Northern Irish backstop.
A second reason why the euro to pound interbank exchange rate has strengthened is because the UK economy is showing signs of slowing, and the Bank of England (BoE) may cut interest rates.
Looking forward, the value of the euro versus the pound sterling could be affected by UK unemployment data today, plus ZEW’s German economic sentiment.
Let's look more closely at these explanations why the EUR has neared this seven-month high versus the GBP. This could benefit you, for when you transfer money to the UK this year.
Euro to The Pound Today Rises, as Johnson and Hunt Rule Out Backstop
As I mention, a first reason why the euro to pound interbank exchange rate has neared this seven-month high is because the candidates to replace Theresa May as Prime Minister, ex-Mayor of London Boris Johnson and Foreign Secretary Jeremy Hunt, have ruled out the planned Northern Irish backstop.
This raises the probability of a 'No Deal' Brexit in the coming weeks or months.
Speaking at a The Sun newspaper and Talk Radio debate on Monday 15th July, Mr. Johnson and Mr. Hunt refused to support the draft Northern Irish backstop negotiated by Theresa May, reports The Guardian newspaper.
According to this proposed backstop, if the UK exits the EU without a deal, then Northern Ireland will remain in a Customs Union with the EU, to ensure that there's no hard border with the Republic of Ireland.
The objective of the Northern Irish backstop is to protect peace on the island of Ireland. However, critics of the backstop say that it's a back door way of keeping the UK tied to EU rules and regulations, even after Brexit.
This is because, if the backstop is activated, then to ensure regulatory harmony across all the UK, the rest of the UK would enter the EU's Customs Union too.
For these reasons, on Monday both Mr. Johnson and Mr. Hunt ruled out the backstop.
In particular, Mr. Johnson said that: "I think the problem is very fundamental. It has been devised by this country as an instrument of our own incarceration in the single market and customs union. It needs to come out."
Meanwhile, Mr. Hunt said that: "the backstop, as it is, is dead."
The thing is though, while ruling out the Northern Irish backstop would ensure the UK's independence from the EU after Brexit, it's an important part of the draft Brexit deal that Theresa May negotiated with the EU.
The EU has repeatedly said that it will refuse to renegotiate the draft Brexit deal. So Mr. Johnson's and Mr. Hunt's new pledge takes the UK closer to 'No Deal'.
In turn, the Prime Ministerial candidates' tough stance risks exacerbating tensions both with the EU and inside the UK.
For example, yesterday the Chancellor, Philip Hammond, reiterated his promise that: "if the new government tries to drive the UK over a cliff edge called no-deal Brexit, I will do everything I can to stop that happening,” reports PoliticsHomes.com.
Meanwhile, the House of Lords has introduced a bill to stop the next Prime Minister proroguing Parliament, to force through a 'No Deal' Brexit. By proroguing Parliament, we mean that Mr. Johnson or Mr. Hunt would shut down Parliament, to stop MPs objecting to a 'No Deal'.
This hasn't been done since the English Civil War, and according to the Lords, would be a "constitutional outrage".
So Mr. Johnson's and Mr. Hunt's promise to rule out the backstop is meant to ensure the UK's sovereignty after Brexit. However, it raises the probability that the UK will exit the EU without a deal, thus weakening the pound.
EUR to GBP Rate Rises, as UK Slows, BoE Talks Rate Cut
In addition, another factor why the euro rates today have neared this seven-month high is because the UK's economy has showed signs of slowing recently.
Meanwhile, the Bank of England (BoE) is talking up the possibility that it will cut UK interest rates in the foreseeable future, below 0.75%. Until recently, the UK's economic resilience was an element supporting the pound.
According to the financial markets, the UK economy may have stagnated in Q2 2019, between April and June, or even contracted slightly, by -0.1%.
This forecast follows several economic releases recently, in which we've learnt that the UK's manufacturing and construction sectors are shrinking at the fastest pace in several years. Meanwhile, British services are barely expanding.
As a result, yesterday Bank of England policymaker Gertjan Vlieghe revealed that he might vote to cut UK borrowing costs in the coming months, according to respected financial news source Reuters.
In a speech in London at Thompson Reuters, Mr. Vlieghe said that the UK's economic outlook had deteriorated since his last speech in February. He pointed to the fact that job vacancies were no longer rising, while wage growth had stabilised.
The central bank policymaker, who's one of nine members of the BoE's Monetary Policy Committee (MPC) that decides UK interest rates, added that:
“On balance, I think it is more likely that I would move to cut [UK interest rates] towards the effective lower bound of close to 0% in the event of a no-deal scenario."
Mr. Vlieghe's comments suggest that the BoE is moving closer to cutting UK interest rates.
His speech yesterday follows similar remarks by central bank executive Silvana Tenreyro plus Governor Mark Carney, who've both warned that the UK economy is slowing, and that they might have to cut borrowing costs. This suggests that the UK needs greater monetary support, thus weighing on sterling.
Euro Versus Pound May Be Affected by UK Unemployment, German Sentiment
Meanwhile, looking forward to today, there are several economic releases that could influence the euro to pound interbank exchange rate, as well as the ongoing uncertainties about Brexit.
To start with, the UK's unemployment rate for the three months to May 2019 is released at 09.30 BST. It's forecast that UK joblessness stayed at 3.8%, its lowest since the mid-1970s.
At the same time, UK wage growth statistics for the three months to May are released too, and are predicted to show wage pressures at 3.1%. This would be the joint-fastest since the 2008 financial crash, according to FXStreet.com.
If these UK labour market statistics meet or exceed forecasts, this might influence the value of the pound. This is because the UK's rapidly falling unemployment and strong jobs growth has been a bright spot in the UK economy, given the Brexit uncertainty.
So signs that the UK continues to create lots of jobs, and pay higher pay packets, will point to resilience among British businesses.
Meanwhile, economics watchdog ZEW releases Germany's Economic Sentiment for July 2019 today at 10.00 BST. This is predicted to show an improvement to -20.0, from June's downbeat -21.1.
However, if these predictions are accurate, they'll continue to suggest that German companies feel downbeat, weighed down by uncertainty over US President Donald Trump's trade disputes. This may influence the value of the euro.
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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 email@example.com.