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Euro vs Pound Rate Hits 2-Week High, as UK Economy Slows

Market CommentaryEuro vs Pound Rate Hits 2-Week High, as UK Economy Slows
Euro vs Pound Rate Hits 2-Week High, as UK Economy Slows
Image credit: Public Domain Pictures.

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

The common currency rises versus sterling! The euro to pound interbank exchange rate has hit 0.8820 today, its strongest in 2 weeks, or since January 22nd.

To put this into context, back on January 26th, the euro was at just 0.8620 versus the pound. So it's since risen by +2 cents, +2.32%!

At today's interbank exchange rate, 250,000€ in UK pounds would be worth £220,500. This is +£5,000 more than on January 26th!

So if you're a Brit thinking of selling your holiday home in Spain or France and repatriating to the UK, this may help you when you exchange euros to pounds.

Euro to Pound Rate Rises, as UK Economy Decelerates

The euro vs pound exchange rate has reached this 2-week high, because the UK's services sector, the biggest part of Britain's economy, slowed in January, it was revealed yesterday.

The UK services sector hit just 50.1 last month, according to IHS Markit's monthly indicator. This is well below financial market forecasts for 51.0, and close to the 50.0 figure that signals stagnation.

In particular, UK services sector firms reported that Brexit uncertainty was weighing on demand.

As a result, UK GDP may stagnate in early 2019. So this has lifted the euro to pound exchange rate!

Euro vs Pound Jumps, as PM Commits to March Brexit

What's more, the euro to pound interbank exchange rate has also hit this 2-week high, as UK prime minister Theresa May has committed to leaving the EU on March 29th, in under 2 months.

Yesterday, Mrs. May told her Cabinet that she won't extend Article 50, the UK's negotiating timetable with the EU for Brexit.

As a result, this puts the UK under more pressure to agree a Brexit deal in the 7 weeks remaining. Alternatively, if there's "No Deal", the UK may crash out of the EU in late March.

This uncertainty may weigh on Britain's economic growth, lifting the euro vs the pound!

Euro Climbs Against Pound, as Eurozone Beats Forecasts

Moreover, the euro has also strengthened against the pound, because the Eurozone's latest economic data has exceeded investors' forecasts.

For instance, the Eurozone's retail sales expanded by +0.8% in December compared to a year ago, said official statistics agency Eurostat on Tuesday. This is above financial market predictions for +0.5%.

In addition, Eurozone business activity touched 51.0 last month, according to IHS Markit yesterday, beyond investors' hopes for 50.7.

This tells us that the Eurozone isn’t yet in recession, boosting the euro versus pound 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 peter.lavelle@purefx.co.uk.

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