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Euro Reaches 15-Week High Versus Pound, as Brexit Deal Progress Slow

Market CommentaryEuro Reaches 15-Week High Versus Pound, as Brexit Deal Progress Slow
Euro Reaches 15-Week High Versus Pound, as Brexit Deal Progress Slow
Image credit: Su Sankers.

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

This tells you when it's an excellent time to exchange euros to pounds, for your money transfer!

The common currency flies versus sterling! The euro to pound interbank exchange rate has hit 0.8885 today, its highest in 15 weeks, or since March 11th.

The euro has risen against the pound, because financial markets are worried that progress to reach a Brexit deal is slow, following an EU summit this week.

The pound has lost out, in particular because Ireland's Taoiseach Leo Varadkar said on Thursday that the lack of progress in negotiations so far was "very disappointing".

"Time is running out for the withdrawal agreement to be concluded satisfactorily by the October council" between the UK and the EU, added Mr. Varadkar, thus weakening sterling.

There are "concerns about a more pessimistic Brexit outlook from the country’s businesses, a lack of faith in Theresa May," says Spreadex's Connor Campbell, thereby weighing on the pound.

This has dragged down sterling, because when the UK and the EU make slow progress on Brexit, this lifts uncertainty for the UK's businesses, which may slow Britain's GDP growth!

Pound Falls, as BoE's Cunliffe Signals High Household Debt

What's more, the euro has also strengthened against the pound, because Bank of England (BoE) deputy governor Jon Cunliffe yesterday warned of the UK's high household debt.

Speaking on a BBC radio interview, Mr. Cunliffe said that "(Household debt is) quite high by historical standards… within that there are areas that you do worry about," thus hurting sterling.

The UK's central bank executive added that "You worry about households that have high debt (and) could be badly affected in a recession," thereby weakening the pound also.

This has weighed on sterling, first because Mr. Cunliffe's comments draw attention to the risks to the UK's financial stability, should indebted households enter financial difficulties.

This has also dragged down the pound, because Mr. Cunliffe's remarks suggest that he may prefer to keep UK interest rates low, to provide support to households with high debt.

As a result, the euro to pound interbank exchange rate has hit this 15-week high, and may rise further!

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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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