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Pound Close to 7-Year High Versus Euro, as Deflation Stalks Europe

Market CommentaryPound Close to 7-Year High Versus Euro, as Deflation Stalks Europe

by Peter Lavelle

Welcome to my latest update of the pound to euro exchange rate.

Sterling flies extremely high versus the euro!

The pound to euro exchange rate has reached 1.2880 today, just below its strongest in 7 years, or since March 7th 2008.

To put this into context, sterling was at just 1.1999 a year ago. Hence, it’s since gained by +7.34%, or 8 cents.

A £250,000 transfer to Europe would hence be worth +€22,025 more today than at the start of 2014.

(Please bear in mind, these are the interbank rates at the time of writing. This means the exchange rate may have changed since then.)

Euro may fall, as Eurozone may enter deflation

What’s more, the pound to euro exchange rate may continue to rise. Here’s why:

1. The euro may fall, because Eurozone inflation fell to -0.2% last month, the least since 2009, threatening full deflation.

2. The euro could drop, because European Central Bank Ewald Nowotny today said that “it is important that one takes deflation risks seriously and addresses them.”

3. The euro may weaken, because economist Neil Mellor said today that “ultimately the downtrend in the euro is set.”

With this in mind, look for the pound to strengthen further versus the euro!

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We’ll tell you when the best exchange rate becomes available.

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