The euro to pound interbank exchange rate has reached 0.9006 today. This is its highest in seven months, or since January 11th.
By contrast, back on May 6th, the euro was as low as 0.8505 versus the pound. So it's since risen by over +5 cents, or by +5.89%.
This may benefit you, if you're a Briton selling property abroad in Spain, France or Italy, or a Eurozone business owner importing UK products.
This is because you might now get a higher British sterling total in your UK bank account, compared to if you'd exchanged currencies earlier in 2019.
In turn, this would make it more profitable for you to repatriate the funds from your property sale, or cut your import costs for your business.
To stay up-to-date with the euro to pound interbank exchange rate, visit Pure FX's Rates & Tools page, and select 'EUR' to 'GBP'. You'll see today's exchange rate, and for the last week.
Also, to check what's influencing the euro to the pound today, go to our EUR to GBP Exchange Rate Updates page. Click on the latest article to see what's affecting the rate recently.
A first reason why the euro to pound interbank exchange rate has hit this seven-month high is because there's continuing Brexit uncertainty, and signs of a UK economic slowdown.
A second factor why the Eurozone's common currency has strengthened against the British pound is because UK retail sales fell in June, said respected statistics this week.
However, looking forward, the value of the euro might be affected if, as the Governor of the Bank of France has suggested, the European Central Bank cuts interest rates this month.
Let's look more closely at these reasons why the euro rates today have reached this seven-month high. You may find this helpful, for when you decide to transfer money to the UK.
Euro to The Pound Today Touches 7-Month High, as UK Economy Eases
As I mention, a first partial explanation why the euro to pound interbank exchange rate has reached today's seven-month high is because there's continuing Brexit uncertainty, and signs that the UK economy is slowing down.
In particular, both candidates to become Prime Minister have pledged to pursue a 'No Deal' Brexit if necessary, and it's feared that UK GDP contracted in Q2.
In recent weeks, both Boris Johnson and Jeremy Hunt, the candidates to replace Theresa May as leader of the Conservative Party and Prime Minister, have promised to take the UK out of the EU without a deal if needed.
For example, Mr. Johnson has asked Brussels to "look into our eyes" to see that we're serious about a 'No Deal', reports The Times newspaper. Meanwhile, Mr. Hunt would take the UK out of the EU without an agreement, if it looks unlikely that we'll reach a deal by September 30th.
Mr. Johnson and Mr. Hunt have made these pledges, to win the support of the Tory Party's 160,000 or so members, who are overwhelmingly pro-Brexit.
However, the next Prime Minister's decisions about Brexit will affect the UK's whole population of 67 million, so Mr. Johnson's and Mr. Hunt's pledges over 'No Deal' have alarmed both Parliament and UK businesses.
For example, it's thought that Chancellor Philip Hammond has won the support of 30 Tory MPs, to block a 'No Deal' Brexit, according to Sky News. Meanwhile, the opposition Labour Party, led by Jeremy Corbyn, has pledged to support ‘Remain’, if there's another EU referendum.
In addition, what with this uncertainty over the UK's Brexit outcome, there are growing signs that the UK's economy is slowing.
After all, the UK's GDP (Gross Domestic Product) fell by -0.5% in April, said the Office for National Statistics (ONS) recently. This is because, following efforts to stockpile goods ahead of the UK's original Brexit deadline of March 31st, businesses now need to produce less.
Since then, economics watchdog IHS Markit has reported that Britain's economy has decelerated further.
This is weakening the pound, because it's now been over three years since the UK's vote for Brexit, yet we're still no closer to knowing how the UK will exit the EU.
In the meantime, two Prime Ministers have resigned, the next Prime Minister looks set to support 'No Deal' in spite of the objections of his own MPs, and the UK economy is slowing. So this is weighing down sterling.
Euro to Pound Exchange Rate Strengthens, as UK Retail Sales Fall
In addition, another reason why the euro to pound interbank exchange rate has reached this seven-month high is because UK retail sales fell sharply in June, said trusted data this week.
According to the British Retail Consortium on Monday 8th July, UK retail sales fell by -1.3% in June 2019 compared to a year ago. This is the sharpest decline in June since records began.
In particular, UK retail sales fell in June, because consumers are unwilling to make large purchases ahead of Brexit, reports the BRC. Last month, there was a sharp decline in garden furniture and barbecue sales, as well as impulse purchases.
Overall, non-food in-store sales in the three months to June fell by -4.1%, raising concerns about the health of the British high street.
Helen Dickinson, chief executive of the BRC, said about these statistics that: “Overall, the picture is bleak. Rising real wages have failed to translate into higher spending as ongoing Brexit uncertainty led consumers to put off non-essential purchases.”
Meanwhile, Paul Martin, UK head of retail at KPMG, said that: "Consumer spend is only likely to fall further as things stand."
These downbeat figures have weakened British sterling, because retail sales make up a major part of the UK's economy. When consumers spend more, these indicates that they're confident about the economic outlook, which contributes to Britain's prosperity.
By contrast, when shoppers spend less, this can point to economic dark clouds on the horizon, thus dragging down sterling.
Euro Could Be Affected, as ECB Hints at More Stimulus
However, looking forward, the value of the euro could be influenced, as a policymaker at the European Central Bank (ECB) has hinted that the central bank may unveil more stimulus, as soon as this month.
Were the ECB to unveil more stimulus, this would tell us that the Eurozone's economy needs more monetary support to stay upright, and is a pessimistic signal.
Speaking to the Financial Times this weekend, François Villeroy de Galhau, France’s central bank governor and member of the ECB's Governing Council, suggested that the central bank could cut interest rates and add extra quantitative easing (QE) this month.
Mr. Villeroy de Galhau said that: "If we speak about monetary policy we have several Governing Councils to come, in the next month, including with Mario Draghi."
The Governor of the Bank of France added that: "And if and when needed, there must be no doubt about our determination to act and our capacity to act. Many things are possible but nothing is decided today. Let’s be pragmatic in our next (ECB) meetings."
So this suggests that Mr. Villeroy de Galhau is open about the possibility of cutting interest rates below their current 0.0%, including in July.
When the ECB cuts interest rates or extends QE, this injects vast sums of euros into the Eurozone's financial system. This lowers borrowing costs, which encourages businesses and households to take out loans, which encourages economic activity.
Simultaneously however, printing euros devalues the euro, because there are more euros available. This may affect the exchange rate.
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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.