Pure FX Logo arrow Reviews On Feefo Pure FX Logo Exemplary Service In-Depth Knowledge We're Jargon Free Same-Day Transfers Better Exchange Rates Purefx_currency_exchange Personal Transfers Business Transfers Personal Service Trusted Brokers Get A Quote Register With Us Make A Transfer Seller Transfers Contract Definitions Read Our Top Tips What Influences Exchange Rates Glossary Frequently Asked Questions Contact Us

Euro Rates Today Rise, as UK General Election Looks Likelier

Market CommentaryEuro Rates Today Rise, as UK General Election Looks Likelier
Euro Rates Today Rise, as UK General Election Looks Likelier
Euro Rates Today.

The euro to pound interbank exchange rate stands at 0.9119 today at the time of writing. This is the common currency’s highest versus sterling in one week, or since August 25th.

By comparison, back on Sunday 1st September, the euro was as low as 0.9006 versus the pound. So the euro has since strengthened by over one cent, or by +1.25%.

This could be useful information for you, if you’re a Briton selling property abroad in the Eurozone, such as Spain or France, or a Eurozone business owner importing British products.

This is because, when you exchange euros for pounds, you might now get a higher British sterling total in your UK bank account. This is compared to if you’d bought pounds in the last week.

In turn, this might make it more profitable to transfer the money of your Spanish or French property sale back to the UK, or reduce your international payments costs to import British goods.

To stay up-to-date with the value of the euro against the pound, visit Pure FX’s Rates & Tools page. Here, select ‘EUR’ (euro) to ‘GBP’ (Great British pound) to see this week’s interbank rates.

Also, to check what’s influencing the euro rates today, visit our EUR to GBP Exchange Rate Updates page. Here, click on the latest article to see what’s affecting the EUR/GBP interbank rate.

A first reason why the euro to the pound today has reached this one-week high is because it’s thought that UK Prime Minister Boris Johnson is likelier to call a general election, perhaps this week.

A second factor why the common currency has strengthened versus sterling is because the UK’s manufacturing sector contracted further in August, according to trusted statistics yesterday.

However, looking to the near future, the value of the euro might be affected, because Germany’s economy continues to slow, and the European Central Bank (ECB) may soon cut interest rates.

Let’s take a closer look at these reasons why the euro rates today have reached this one-week high. You could find this helpful, ahead of when you transfer money to the UK from the Eurozone.

Euro to The Pound Today Gains, as Johnson Likelier to Call General Election

As I mention, a first reason why the euro to pound interbank exchange rate has reached this one-week high is because it’s thought likelier that UK Prime Minister (PM) Boris Johnson will call a UK general election, perhaps as soon as this week.

This has weakened the pound, because this would add to the UK’s political uncertainty, even when we still don’t know what form Brexit will take.

It’s thought that Mr. Johnson might call an election this week, in response to opposition MPs’ attempts to take control of Parliament’s legislative agenda, to pass a law blocking a ‘No Deal’ Brexit, according to The Guardian newspaper.

To explain, last week the PM announced that he’d suspend Parliament from September 12th to October 14th. This is ostensibly to prepare his new government’s agenda, as is Westminster convention.

However, opposition MPs fear that the PM intends to prorogue, or shut down, Parliament, to prevent them debating or amending Mr. Johnson’s Conservative government’s Brexit plans.

In particular, by closing Parliament until October 14th, Mr. Johnson gives opposition MPs a very narrow window to block a ‘No Deal’ Brexit, ahead of the UK’s Brexit deadline on October 31st.

As a result of Mr. Johnson’s announcement that he’ll suspend Parliament, opposition MPs have accelerated their plans to pass a law obliging the PM to request an extension to Article 50, the UK’s Brexit negotiating timetable.

Parliament returns from its Summer recess today, and it’s thought that opposition MPs intend to take control of Parliament’s agenda today, to block a ‘No Deal’.

In particular, late last week Jeremy Corbyn, the leader of the opposition Labour Party, met the other opposition parties, such as the Liberal Democrats and Scottish National Party, to agree a plan.

In addition, it’s thought that Mr. Corbyn could have the support of rebel Conservative MPs, such as former Chancellor Philip Hammond, who oppose the UK exiting the EU without a deal.

However, yesterday the PM, speaking outside 10 Downing Street, responded to opposition MPs’ plans by suggesting that he’d call a general election, if they successfully pass a law blocking a ‘No Deal’ Brexit.

Mr. Johnson said that: "If they do (vote for a delay), they will plainly chop the legs out from under the UK position and make any further negotiation absolutely impossible.”

Also, it’s been reported that Mr. Johnson favours banning Conservative MPs from the party, if they vote with opposition MPs this week. This could include senior MPs, such as former Attorney General Dominic Grieve, or ex-Tory leadership candidate Rory Stewart, according to the Financial Times newspaper.

However, Mr. Johnson’s majority in the House of Commons is just one MP, so if he does this, he’ll lose his majority.

So if the PM follows through on his threat of banning rebel Conservative MPs, he’ll have even more incentive to call a general election, to try and win a larger majority.

When a general election is called, it must be held six weeks later as a minimum. So if Mr. Johnson takes the UK to the polls, a general election could by held as soon as October 14th, before the UK exits the EU.

If Mr. Johnson calls a general election for October 14th, this could win support among opposition MPs. First, this is because Jeremy Corbyn’s Labour Party wants to go the polls, to try and win a Parliamentary majority to form a government.

Second, if there’s a new government in place by mid-October, they’d have time to amend or continue with the UK’s existing Brexit plans, before the Halloween deadline.

However, the PM’s suggestion that he may call a general election has weakened the pound on the interbank foreign exchange market. This is because, if there’s a general election, this would further complicate the UK’s Brexit outlook, with the clock running down.

Also, this raises the possibility that the hard-left Labour Party might win power, which could weaken the UK’s economic outlook in the years ahead.

EUR to GBP Exchange Rate Rises, as UK Manufacturing Sector Shrinks Further

In addition, another partial explanation why the euro to pound interbank exchange rate has reached this one-week high today is because the UK’s manufacturing sector shrank again in August, said trusted statistics on Monday.

This increases the probability that the UK might enter a technical recession over the Autumn, following the UK’s -0.1% contraction in Q2, from April to June.

According to economics watchdog IHS Markit yesterday, the UK’s Manufacturing PMI (Purchasing Managers’ Index) fell to 47.4 last month.

This was below economists’ forecasts for 48.4, July’s figure of 48.0, and well beneath the 50.0 number that separates growth from contraction. It’s also the UK factories’ fourth consecutive monthly fall, and the lowest result since July 2012.

The UK’s manufacturers reported that both domestic and international demand weakened in August. On the one hand, this is because of Brexit, which is weighing on British companies’ desire to buy equipment or invest.

On the other hand, it’s also because of the USA’s and China’s trade war. This is decelerating the global economy, including demand for British manufactured goods.

Moreover, UK manufacturing optimism hit a new record low, added IHS Markit. Meanwhile, new orders to UK factories fell at the fastest pace in seven years in August too, at 44.4 from 46.9 in July.

This bodes particularly ill for the UK’s factory sector, because when new orders decline, this suggests that there’s little demand for more goods in the near future, to drive business.

Samuel Tombs, Chief UK Economist at Pantheon Macroeconomics, said about these figures that they: “indicate that support from another round of no-deal Brexit preparations currently is too modest to insulate U.K. producers from the global downturn.”

“The U.K.’s PMI is only trivially above the Eurozone’s—47.0 in August—and the former might even fall further,” added Mr. Tombs.

This has weakened the value of sterling, because these figures contribute to signs that the UK economy is slowing, ahead of Brexit. Recently, we learnt that UK GDP (Gross Domestic Product) fell by -0.1% in Q2, over April to June, its first fall since 2012.

Now, what with UK manufacturing activity falling further, the economy may shrink again in Q3, in which case we’d enter a recession, thereby weighing down the pound.

Euro to Pound Rate Might Be Affected, as Germany’s Economy Slows, ECB to Cut

However, looking to the immediate future, it’s useful to note that there are several factors which could affect the value of the euro on the interbank currency market.

Namely, the economy of Germany, the Eurozone’s largest, has shown several signs of weakening in the last week. Meanwhile, it’s thought that the European Central Bank may cut interest rates later this month.

To begin with, Germany’s Manufacturing PMI fell to 43.5 in August, said IHS Markit yesterday, beneath the financial markets’ forecasts for 43.6, plus July’s 43.6.

This was German factories’ eighth consecutive month below the 50.0 figure that signals growth, and is notable, because manufacturing makes up a sizeable 20% of Germany’s GDP. So this will decelerate Germany’s GDP growth.

In addition, last Friday 30th August we learnt that Germany’s Retail Sales fell by -2.2% in July compared to the month before. This was below predictions for -1.0%, as well as June’s +3.5% rise.

This suggests that German households are spending less, at a time when Germany’s international customers are buying fewer goods, because of the United States’ and China’s trade dispute.

Furthermore, it was revealed on last Thursday 29th August that Germany’s Inflation eased to 1.0% in August, below predictions for 1.2%, and July’s 1.1%.

This is further below the ECB’s official target of close-to-but-below 2.0%. This suggests that Germany, the Eurozone’s economic motor, is expanding too slowly to generate consistently higher price pressures.

With this in mind, it looks likely that the ECB, the Eurozone’s central bank, will cut interest rates and expand its extraordinary monetary stimulus, known as Quantitative Easing (QE), when it meets on September 13th.

This would contribute to support Germany’s and the Eurozone’s economy. However, this involves injecting vast quantities of euros into the financial system, which simultaneously devalues 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]

Get a Quote
Feefo service

What Our Clients Say

Read all the reviews at Feefo.com

Why Us

Exceptional Service

We have received Feefo's Gold Trusted Service Award 3 years in a row.

Same Day Transfers

We can transfer your money to your destination bank account the same day you send it, once we’ve confirmed the payment details with you.

Competitive Exchange Rates

Competitive exchange rates and transparent transfer fees, so you know exactly what you’re paying for.

Dedicated Personal Service

To guide you through the transfer process and keep you up-to-date with the changing exchange rates.

Established in 2006

Since then, we’ve transferred money for thousands of satisfied clients.

How It Works

  • 1. Register

    for a no obligation account
  • 2. Agree the exchange rate

    with your account manager over the phone
  • 3. Send us payment

    for the transfer of your purchased currency
  • 4. We transfer the currency

    to your nominated account