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 Seller Transfers Get A Quote Register With Us Make A Transfer Trusted Brokers FCA Authorized Personal Service Contract Definitions Read Our Top Tips What Influences Exchange Rates Glossary Frequently Asked Questions Contact Us

Euro to The Pound Today Hits 2-Week High, on BoE Rate Cut Odds

Market CommentaryEuro to The Pound Today Hits 2-Week High, on BoE Rate Cut Odds
Euro to The Pound Today Hits 2-Week High, on BoE Rate Cut Odds
EUR to GBP.

The euro to the pound interbank exchange rate stands at 0.8562 today. This is its highest in over 2 weeks, or since December 27th 2019. By comparison, back on January 1st 2020, the Eurozone’s common currency was as weak as 0.8437 versus sterling, so it’s since strengthened by over 1.25 cents, or by 1.48%.

One partial explanation why the EUR to GBP interbank exchange rate has risen is because markets are increasingly factoring in the possibility that the Bank of England (BoE) might soon cut UK interest rates, following a speech by Governor Mark Carney last week.

Speaking at a BoE Research Workshop, Mr. Carney said that, if the UK economy doesn’t accelerate in the next few months, this could encourage a “relatively prompt response” from the central bank.

This suggests that the UK’s central bank could cut interest rates below their current 0.75%, back to their all-time low of 0.5%. In theory, this would support the UK economy, by cutting the cost of a loan for households and businesses.

However, lower UK interest rates traditionally weaken sterling. Over the weekend, Mr. Carney’s remarks were echoed by his BoE colleague Gertjan Vlieghe, who said that he would “consider” voting to cut interest rates, if the UK economy remains slow.

Pound Weakens, as UK GDP Shrinks by 0.3% in November

In addition, another factor why the euro to the pound interbank exchange rate has strengthened is because, this morning, we’ve learnt that UK GDP (Gross Domestic Product) unexpectedly weakened by 0.3% in November.

According to the Office for National Statistics (ONS), the UK economy shrank over this month, well below economists’ predictions for a flat 0.0% expansion.

In part, this is because the UK economy continued to feel the effects of Brexit uncertainty in November. Also, this was before the Conservative Party’s election victory in December, which it’s thought has since increased business confidence.

This has weakened sterling, because when UK growth slows, this tends to mean there are fewer investment opportunities in the UK.

Euro Gains, as Eurozone PMI Improves in December

Elsewhere, the EUR to GBP interbank exchange rate has gained, because recently we’ve learnt that the Eurozone’s economy accelerated in November.

According to watchdog IHS Markit’s composite PMI (Purchasing Managers’ Index) for December last month, activity in the currency bloc rose to 50.9, above November’s 50.6. This suggests that services and manufacturing firms on the continent are producing more.

Looking ahead, it’s a packed week for economic data. This Wednesday 15th, we’ll learn the UK’s inflation figures for December, forecast at 1.5%, below the BoE’s 2.0% target. Then, on Thursday 16th, the European Central Bank’s latest meeting minutes are released.

Also, UK retail sales figures for December go public on Friday 17th, and are predicted to have risen by 0.8%, well above November’s 0.6% fall. All these releases could affect the EUR to GBP interbank exchange rate.

Get A Free Exchange Rate Quote

Get a free exchange rate quote to get a competitive exchange rate, and find out how much you could save with Pure FX.

You’ll get a 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 Contact Us.

Get a Quote
Feefo service

What Our Clients Say

Read all the reviews at Feefo.com

Why Us

FCA Authorised E-Money institution

Authorised by the UK’s Financial Conduct Authority, so you can rest assured that we’re handling your money responsibly.

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