Pure FX Blog

12 January 2018

Euro Nears 1-Week High Versus Pound, as ECB Hints at Cutting Stimulus

The euro to pound interbank exchange rate has neared its highest since January 4th today, at 0.8906, as the European Central Bank may soon cut its monetary stimulus, according to the ECB's latest minutes. Image credit: Sam Savine.

The euro to pound interbank exchange rate has neared its highest since January 4th today, at 0.8906, as the European Central Bank may soon cut its monetary stimulus, according to the ECB’s latest minutes. Image credit: Sam Savine.

by Peter Lavelle

Welcome to Pure FX’s latest update of the euro to pound interbank exchange rate.

This tells you when it’s a favourable time to exchange euros to pounds, for your money transfer!

The common currency climbs versus sterling! The euro to pound interbank exchange rate has neared its highest in 1 week today, or since January 4th, at 0.8906.

The euro has risen against the pound, because yesterday the European Central Bank (ECB) hinted that it may cut its vast monetary stimulus earlier than previously thought.

The euro has jumped, as yesterday the ECB published the minutes of its latest meeting, which said “the language pertaining to the monetary policy stance could be revisited early in 2018.”

This has strengthened the euro, because this tells us that the Eurozone’s central bank may be preparing to cut its monetary stimulus, beyond its current €30bn a month up to September 2018.

This has also lifted the euro, because the ECB’s minutes reflect recent comments from policymaker Benoit Coeure, who said in December that the ECB’s stimulus may not be extended!

Euro flies higher, as German economy accelerates

Moreover, the euro to pound interbank exchange rate has also hit this 1-week high, because Germany’s economy expanded at the fastest pace in 6 years in 2017, said official data yesterday.

The euro has hopped, skipped and jumped, because German GDP increased by +2.2% in 2017, said Germany’s official Federal Statistics Office on Thursday, more than any year since 2011.

In particular, German GDP growth accelerated in 2017, as businesses invested more. German GDP is forecast to rise by +2.5% in 2018, says the Bundesbank, thereby further lifting the euro.

This has strengthened the common currency, because Germany is the Eurozone’s largest economy. Hence, when German GDP rises, the rest of the currency bloc benefits too.

What’s more, the euro has also jumped, as Eurozone industrial production climbed by +1.0% in November, said Eurostat yesterday, thus exceeding financial market forecasts for +0.8%.

With all this in mind, the euro has neared this 1-week high versus the pound today!

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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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