Pure FX Blog

11 September 2017

Pound Hits 1-Month High Versus Euro, as UK Manufacturing Accelerates

The pound to euro interbank exchange rate has hit 1.0983 today, its highest since August 14th, as UK manufacturing production rose +1.9% in July YoY. Image credit: William Lepretre.

The pound to euro interbank exchange rate has hit 1.0983 today, its highest since August 14th, as UK manufacturing production rose +1.9% in July YoY. Image credit: William Lepretre.

by Peter Lavelle

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

Sterling bounces back versus the common currency! The pound to euro interbank exchange rate has hit 1.0983 today, its highest in 1 month, or since August 14th.

The pound has risen against the euro, because UK manufacturing production rose +1.9% in July year-on-year, said the Office for National Statistics on Friday, above forecasts for +1.7%.

In particular, output at the UK’s factories increased in July, as car production rose. This was the fastest growth in UK manufacturing output so far this year, thus boosting the pound.

According to UK manufacturing body EEF, UK factories are enjoying “buoyant conditions”, while UK exporters are going from “strength-to-strength”, thereby lifting sterling.

There are “hopes that rising goods production will act as a prop to the economy” during the Brexit negotiations, says IHS Markit economist Chris Williamson, so strengthening the pound!

Euro weakens, as German trade surplus shrinks

Moreover, the pound has also jumped against the euro, because Germany’s trade surplus shrank to €19.5bn in July, said Statistiches Bundesamt Deutschland on Friday, below €20.3bn forecasts.

In particular, Germany’s trade surplus fell, as Germany’s exports rose just +0.2% in July, well below financial market forecasts for a +1.25% jump, and thereby weighing on the euro.

This has weakened the euro, first because this trade data suggests that the euro’s rise this year may be making German exports less competitive overseas, as they’re more expensive.

Also, orders in Germany’s factories unexpectedly dropped -0.7% in July, far beneath predictions for a +0.3% rise. This points to German economic weakness, and has dragged down the euro too.

Given all this, the pound to euro interbank exchange rate has hit this 1-month high 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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