The euro to the pound today stands at 0.8976. This is just -0.11% below the interbank exchange rate's highest since January 11th, or close to seven months, at 0.8986.
To put this into context, back on May 6th, the euro to pound interbank exchange rate was as low as 0.8505. So it's since risen by close to 4.75 cents, or by 5.53%.
This rise in the value of the euro may benefit you, if you're a Brit selling property abroad in Spain, France or Italy, or a Eurozone business owner importing British goods.
This is because, when you transfer money to the UK, you might now get a higher total in your British bank account, compared to if you'd bought pounds earlier in 2019.
In turn, this could make it more profitable to repatriate the funds of your property sale to the UK, or make it more affordable for you to import British goods for your company.
To stay up-to-date with the euro to pound interbank exchange, visit Pure FX's Rates & Tools page. Here, select 'EUR' to 'GBP', to see today's exchange rate and for the last week.
Also, to check what's affecting the value of the euro versus British sterling, visit our EUR to GBP Exchange Rate Updates page. Click on the latest article to read the news.
A first factor that's lifted the euro to near this seven-month high against the pound is the UK's continuing Brexit uncertainty, plus evidence that Britain's economy is now slowing.
A second reason why the euro to pound exchange rate has strengthened is because the likely new European Commission President, Ursula von der Leyen, talks tough on Brexit.
However, looking forward, the value of the euro might be influenced by the fact that the likely new President of the European Central Bank, Christine Lagarde, may cut interest rates.
Let's take a closer look at these explanations why the EUR has risen versus the GBP. You might find this useful, to help you decide when to transfer your money to the UK.
Euro to The Pound Today Rises, on Brexit Uncertainty
As I mention, a first partial explanation why the euro to pound interbank exchange rate has neared this seven-month high is because the financial markets and British businesses remain uncertain about the outlook for Brexit.
In turn, there are now growing signs that this is slowing the UK's economy, according to trusted surveys released earlier this week.
The financial markets remain uncertain about Brexit, because the UK looks no closer to reaching a deal with the EU about how to leave than three years ago, when the UK voted for Brexit on June 23rd 2016.
In the years since, outgoing Prime Minister Theresa May has negotiated a draft deal with Brussels, but this has been repeatedly rejected by MPs, forcing Mrs. May to resign.
The candidates to replace Mrs. May, ex-Mayor of London Boris Johnson and Foreign Secretary Jeremy Hunt, both favour a "hard" Brexit, in which the UK would leave the EU with fewer future ties.
In part, this is because, to win the contest to become Prime Minister, Mr. Johnson and Mr. Hunt must appeal to the Conservative Party's base, who're overwhelmingly "hard" Brexiteers.
In recent weeks, both Mr. Johnson and Mr. Hunt have pledged to take the UK out of the EU without a deal, if necessary.
For example, Mr. Johnson has promised that the UK will exit the EU by the end of the extended deadline of October 31st "come what may, do or die". Meanwhile, Mr. Hunt has set September 30th as the deadline for the UK to agree a revised deal with the EU, reports The Telegraph newspaper.
However, while the two candidates' support for a "hard" Brexit increases their chances of winning votes among the Tory Party's members, the rising odds of a "hard" Brexit concerns businesses and investors.
This is because the UK does roughly half its international trade with the EU, so if we exit without a deal, it could become more expensive and time consuming to ship our exports. This has helped to weaken the pound.
Euro to Pound Exchange Rate Climbs, as UK Growth Slows
In addition, there's increasing evidence that the probability of a "hard" or "No Deal" Brexit is negatively weighing on the UK economy. This has contributed to lift the euro versus sterling.
Earlier this week, economics watchdog IHS Markit released its June surveys for the UK's services, manufacturing and construction PMIs (Purchasing Managers Indices.) These showed that Britain's economic activity contracted last month.
In particular, the UK's factory sector shrank at the quickest pace in six years last month, since 2013, while Britain's construction firms contracted faster than any time since 2009.
Meanwhile, the UK's dominant services sector, which makes up roughly 80% of the UK economy, continued to grow, at 50.2. Yet this was barely above the 50.0 figure that signals expansion.
Moreover, what with Brexit uncertainties high and the UK economy slowing, the Bank of England now looks likelier to cut interest rates, below their current 0.75%.
Earlier this week, central bank Governor Mark Carney said in a speech that the case to cut interest rates is "broadening". This would signal that the UK economy requires greater monetary support to prosper.
So with this in mind, the euro to the pound today has neared this seven-month high. This is because the UK's Brexit uncertainty is making investors and businesses nervous.
In turn, companies are delaying decisions, which is slowing the UK's economic growth. As a result, the Bank of England is considering cutting interest rates, to lower borrowing costs and restore confidence.
Euro Rises Versus Pound, as Von Der Leyen Talks Tough on Brexit
Also, another reason why the euro to pound interbank exchange rate has neared this seven-month high is because the leading candidate to become the new President of the European Commission, Germany's Defence Minister Ursula von der Leyen, has been talking tough on Brexit.
It's thought that this increases the probability of a "No Deal" Brexit later this year.
Speaking yesterday, Mrs. von der Leyen told the European Parliament in Strasbourg that, if she replaces Jean-Claude Juncker to become EU Commission President, she'll enforce the Brexit deal's Northern Irish backstop, reports The Independent newspaper.
According to the backstop, if the UK exits the EU without a deal, then the UK will automatically enter a Customs Union with the EU, to prevent the return of a border between Northern Ireland and Ireland.
The goal of the backstop is to preserve peace on the island of Ireland, and respect the Good Friday Agreement of 1998.
According to the agreement, there'll be no border infrastructure between the two countries, to prevent a return to sectarian violence. However, "hard" Brexiteers see the backstop as the EU's way to retain control over the UK after Brexit, by the back door.
In addition, Mrs. von der Leyen has said about Brexit that it's a "bubble burst of hollow promises", and that "they promised that the UK will profit from Brexit. The fact is that everybody is losing."
So this suggests that the likely new EU Commission President is unlikely to take a softer stance over Brexit than Mr. Juncker. In turn, this has contributed to weaken the pound.
EUR to GBP May Be Influenced, as Lagarde to Be New ECB President
Meanwhile, looking ahead, the euro to pound interbank exchange rate might be affected by the fact that International Monetary Fund (IMF) Director Christine Lagarde looks likely to become the next President of the European Central Bank (ECB).
Ms. Largarde will replace Italian Mario Draghi. It's thought that Ms. Lagarde will continue Mr. Draghi's policies of low interest rates and monetary stimulus, according to The Guardian newspaper.
Ms. Lagarde wiill replace Mr. Draghi at the helm of the ECB on November 1st. She's been selected as the next President of the central bank, because the majority of the Eurozone's members want the ECB to keep interest rates low, to support their economies.
This compares to the alternative candidate to replace Mr. Draghi, Germany’s Bundesbank President Jens Weidmann, who wants to hike interest rates.
Ms. Lagardes nomination might influence the value of the euro, because when the ECB cuts interest rates or extends its monetary stimulus, this injects euros into the financial system.
When there are more euros, the currency decreases in value. It's also tougher for global money managers to make money by investing in Eurozone assets, because their returns are lower.
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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 protected]