The euro to pound interbank exchange rate has hit 0.9040 today at the time of writing. This is its highest in over seven months, or since January 3rd 2019.
To put this into context for you, back on May 6th, the euro was as weak as 0.8505 versus the pound. So it's since strengthened by over five cents, or by +6.29%.
This might be useful for you, if you're a Brit selling property abroad in Spain, France or Italy, or a Eurozone business owner importing UK products for your clients.
This is because, when you transfer money to the UK, you might now get a higher pound sterling total, compared to if you'd exchanged currencies earlier this year.
In turn, this would make it more profitable for you to transfer the funds of your property sale to the UK, or reduce your currency for your business costs.
To stay up-to-date with the euro to pound interbank exchange rate, visit our Rates & Tools page. Here, select 'EUR' to 'GBP' to see today's rate and for the last week.
Also, to check what's influencing the value of the euro versus the pound, visit our EUR to GBP Exchange Rate Updates page. Here, click on the latest article to read the news.
A first explanation why the euro to pound interbank exchange rate has reached this seven-month high is because it's been reported that Boris Johnson is planning a 'No Deal' Brexit.
A second reason why the euro has risen versus the pound is because a meeting between the UK's and EU's Brexit executives has gone badly, reports The Times newspaper.
However, looking forward, the euro's value against the pound might be affected by the fact that UK wages rose at the fastest pace in 11 years in May, said official statistics on Tuesday.
Let's look at these reasons why the euro to pound interbank exchange rate has hit this seven-month high. You may find this useful, for when you transfer money to the UK.
Euro to The Pound Today Rises, as Boris Plans 'No Deal' Brexit
As I mention, a first partial explanation why the euro to pound interbank exchange rate has reached this seven-month high is because the likely next Prime Minister, Boris Johnson, is planning a 'No Deal' Brexit, say new reports.
In a 'No Deal' Brexit, the UK would exit the EU at the end of October 31st without any kind of agreement about exports, law enforcement cooperation or citizens' rights.
According to Sky News yesterday, Mr. Johnson's campaign team is considering ways to suspend Parliament, in the weeks up to the extended Brexit deadline of October 31st.
This would prevent both the opposition Labour Party, plus Conservative Party rebels such as Chancellor Philip Hammond or former Attorney General Dominic Grieve, from stopping a 'No Deal' Brexit.
To close Parliament, Mr. Johnson's team is thinking of calling a new session of Parliament in early November. According to convention, Parliament typically closes for up to a fortnight before any new session.
This is so that the government can plan what it wants to achieve in the next Parliamentary session, as well as to prepare the Queen's Speech announcing these objectives.
If when Mr. Johnson arrives at No. 10 Downing Street, he declares a new session of Parliament for early November, then Parliament would be closed in the days leading up to to the Brexit deadline of Halloween.
In consequence, MPs would be in their constituencies, unable to call a vote of 'No Confidence' in Mr. Johnson's government, or take steps to extend the UK's Brexit deadline.
A member of the likely next Prime Minister's campaign team told Sky News on Tuesday that: "A number of ideas are under consideration, including this one."
Meanwhile, Guto Bebb, the Conservative MP for Aberyconwy, said yesterday that: "I read consideration is being given in the Boris camp for proroguing Parliament without a deal."
Mr. Johnson's considering to suspend Parliament has weakened the pound, first, because it's likely to exacerbate the UK's political tensions.
No political leader has shut down Parliament to prevent it debating a subject since the run-up to the English Civil War, in the seventeenth century. According to members of the House of Lords earlier this week, this would be a "constitutional outrage".
Mr. Johnson's thinking about closing the House of Commons has also dragged down sterling, because it suggests that the next Prime Minister is serious about committing the UK to a 'No Deal' Brexit.
If so, we'd be unilaterally breaking political and economic ties with our closest trading partner, with no mitigating arrangements. It's thought that this might tip the UK into recession.
EUR to GBP Rate Strengthens, as Brexit Meeting Goes Badly
In addition, another reason why the euro to pound interbank exchange rate has reached this seven-month high is because a meeting between the UK's and EU's Brexit executives has gone badly, according to new reports.
Last Tuesday, the UK's Brexit Minister, Stephen Barclay, met the EU's Chief Brexit Negotiator, Michel Barnier, in Brussels, to discuss the latest developments on the UK's exit from the EU.
Officials present at the meeting say that it was one of the most "difficult" in the last three years, since the UK voted to exit the EU in June 2016, reports The Times newspaper.
In particular, the UK's Mr. Barclay told Mr. Barnier that the Withdrawal Agreement that outgoing Prime Minister Theresa May negotiated with the EU was "dead". Mr. Barclay repeated this five times.
In turn, Mr. Barnier was "astonished and dismayed" at the "confrontational" meeting. Following their discussions, a senior EU diplomat to The Times that: "If this is what is coming then we will be heading for 'no deal' very quickly."
So the UK's and EU's Brexit executives' meeting has further increased expectations that the UK will exit without a deal at the end of October.
The thing is though, the UK's and EU's economies have grown very intertwined, since the UK joined the EEC (European Economic Community) in the 1970s. Our factories' supply chains are closely linked with factories on the continent, and we hire lots of talent from Europe for UK companies.
So a 'No Deal' Brexit risks pulling the rug under from British companies, thereby hurting the pound.
Euro to Pound May Be Influenced, as UK Wage Growth Rises
However, looking forward, the euro to pound interbank exchange rate might be influenced by the fact that UK wages are growing at the fastest pace in 11 years, said official statistics yesterday.
According to the Office for National Statistics (ONS) on Tuesday, UK wages including bonuses rose by +3.6% in the three months to May, the fastest pace since July 2008.
Once we take inflation into account, UK pay packets are increasing by +1.7%, the most since September 2015. So this tells us that, even with the Brexit uncertainty, UK companies feel comfortable paying their employees higher salaries at present.
This will increase the living standards of British workers, and contribute to the UK's economic prosperity and global standing.
Moreover, UK unemployment held at 3.8% in the three months to May, said the ONS yesterday. This is its lowest since 1974.
Matt Hughes, Deputy Head of Labour Market Statistics at the ONS, said about these figures that:
"Regular pay is growing at its fastest for nearly 11 years in cash terms, and its quickest for over three years after taking account of inflation. The labour market continues to be strong, with the employment rate still at a near-record high and unemployment down again."
These strong labour market statistics might convince the Bank of England to maintain UK interest rates at 0.75% in the coming months. This is because, first, they suggest that the UK economy remains resilient, even with Brexit uncertainty.
Second, higher wages typically lift inflation, which needs higher interest rates to keep it under control. This may influence the pound too, looking forward.
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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.