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GBP vs EUR Hits 22-Month High, as May Wins Brexit Concessions

Market CommentaryGBP vs EUR Hits 22-Month High, as May Wins Brexit Concessions
GBP vs EUR Hits 22-Month High, as May Wins Brexit Concessions
Pound to Euro Exchange Rate. Mijas, Spain.

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

Are you a Brit planning to transfer money to Spain or France from the UK, perhaps to buy a holiday home in the Dordogne or emigrate to the Costa del Sol?

If so, it may interest you to know that the pound to euro interbank exchange rate has hit its highest in 22 months today, or since May 15th 2017, at 1.1767.

By contrast, back at the start of 2019, sterling was as low as 1.1087 versus the common currency. So it's since risen by +6.13% or close to +7 cents!

At today's interbank exchange rate, £250,000 would be worth €294,175, or +€17,000 more than on January 1st 2019!

Sterling Rises Versus Euro, as May Wins Brexit Assurances

The first factor why the pound to euro interbank exchange rate has hit this 22-month high is that UK prime minister Theresa May has won new Brexit assurances.

On Monday night, at a news conference with European Commission president Jean-Claude Juncker in Strasbourg, Mrs. May revealed that she'd won "legally binding" concessions over the Northern Irish backstop.

These concessions allow the UK to start a "formal dispute" with the EU, to ensure that the UK can exit the backstop in future.

It's hoped that this makes a Brexit deal likelier to pass in the coming days, so this has lifted sterling!

GBP vs EUR Rate Strengthens, as German Factories Slow

Also, another reason why sterling has risen versus the euro is that German industrial production fell in January, said official statistics yesterday.

According to Statistisches Bundesamt Deutschland on Monday, German factory output fell by -0.8% at the start of this year, well below economists' forecasts for a +0.4% rise.

This is because German vehicle production dropped, held down by US president Donald Trump's trade disputes, plus China's economic slowdown.

This suggests that Germany's economy continues to decelerate in early 2019, thereby contributing to strengthen sterling against the euro!

Pound to Euro Rate Climbs, as Eurozone Productivity Slips

In addition, a further factor why sterling has touched this 22-month high versus the euro is that Eurozone productivity slipped in the second half of 2018, said trusted data on Monday.

According to the EU's official statistics body Eurostat yesterday, productivity in the common currency bloc fell by -0.1% in Q3 and -0.4% in Q4 last year, the first decline since 2009.

In particular, this is because Germany's economic output stagnated late last year, yet German companies continued to hire workers. This is reducing output per employee.

This too has helped lift the pound versus the euro!

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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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