The pound to euro interbank exchange rate stands at 1.1595 today, only -0.31% above its lowest in 3 weeks, or since March 21st, of 1.1562.
This might be helpful information for you, if you're a Brit thinking of selling your property in Spain or France, or a European planning to emigrate to Britain, for when you transfer money to the UK.
A big factor why sterling has neared this 3-week low versus the euro today is because the EU has extended the UK's Brexit deadline, thus continuing the uncertainty for businesses and investors.
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Let's look more closely at which factors have affected the pound euro exchange rate recently.
EU Extends UK's Brexit Deadline to October 31st
A first factor why sterling has neared this 3-week low versus the euro today is because, last night, the EU extended the UK's Brexit deadline. Now, the UK will have until October 31st to reach a Brexit agreement, rather than the previous time limit of this Friday 12th April.
The EU's 27 leaders agreed to extend the deadline, at a meeting in Brussels on Wednesday night that lasted over 6 hours. The decision to grant the UK an extension to October 31st is a compromise between Germany, who wanted a longer delay, and France, who wanted a shorter one, according to The Financial Times newspaper.
A positive of the EU's decision to extend the Brexit deadline is that the UK will now avoid crashing out of the EU tomorrow without a deal.
That said, financial markets are concerned that the extension will only further the uncertainty, and take the pressure off UK politicians to reach an agreement.
For example, European Commission President Donald Tusk implored UK politicians: "please do not waste the time". Meanwhile, Director-General of the Confederation of British Industry Carolyn Fairbairn warned Britain's politicians that "More of the same will just mean more chaos this autumn."
So even though the UK will now remain a member of the EU for another 6 months, what form Brexit will take and on what terms remains unclear. This has contributed to weaken the pound euro exchange rate near this 3-week low today.
UK Economy Grows Faster Than Forecast in February
Meanwhile, another factor that's influenced the value of sterling versus the euro recently is the fact that the UK economy expanded faster than predicted in February.
According to the UK's Office for National Statistics (ONS) on Wednesday, UK Gross Domestic Product (GDP) grew by +0.2% in February, above forecasts for 0.0%, reports The Guardian newspaper.
In particular, the UK's vast services sector, which makes up roughly 80% of the economy, grew by +0.1% in February. Meanwhile, the construction industry expanded by +0.4%, and manufacturing increased its output by +0.9%. These figures suggest that the UK economy remains resilient to the Brexit uncertainty.
However, the ONS noted that some of British manufacturing's growth in February can be attributed to stockpiling, before Brexit. The government's statistics agency said that there was "some qualitative evidence" that factories were storing goods, ahead of the risk that the UK exits the EU without a deal.
In addition, it looks like Brexit remains the chief influence on the value of sterling versus the euro for the moment. As a result, even though the UK economy continues to expand solidly, the pound euro exchange rate has still neared this 3-week low.
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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 firstname.lastname@example.org.