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Pound Hits 1-Week High Versus Euro, as UK Factory Output Accelerates

Market CommentaryPound Hits 1-Week High Versus Euro, as UK Factory Output Accelerates
Pound Hits 1-Week High Versus Euro, as UK Factory Output Accelerates
Image credit: Roberto Felter

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

This tells you when it's an excellent time to exchange pounds to euros, for your money transfer!

Sterling jumps versus the common currency! The pound to euro interbank exchange rate has hit its highest in 1 week today, or since July 18th, at 1.1260.

The pound has lifted against the euro, because UK factory output has accelerated in July, according to the Confederation of British Industry's monthly poll yesterday.

Sterling has strengthened, because the CBI's UK industrial trends survey has hit +11 this month, thus exceeding financial market forecasts for +9.

In particular, UK manufacturers reported strong order books and buoyant domestic demand. This bodes well for the UK's economic growth in Q3, thus lifting the pound.

"It’s great to see the manufacturing sector firing on all cylinders, with production revving up," said CBI Manufacturing Council Chair Tom Crotty, thereby boosting sterling too.

This has raised the pound, because following the CBI's survey, economists reckon that there's now a 72% chance that the Bank of England will hike UK interest rates in August!

Euro Weakens, as Eurozone Business Activity Slows in July

What's more, the pound has also touched this 1-week high versus the euro, because Eurozone business activity slowed this month, said a closely-watched survey yesterday.

The common currency has weakened, because IHS Markit's composite Eurozone PMI has fallen to 54.3 this month, below predictions of financial market analysts for 54.8.

In particular, the Eurozone's services sector decelerated in July. There were fewer new order inflows and reduced expectations for future activity, thus dragging down the euro.

This has weighed on the euro, first because it's now thought that the common currency bloc will grow just +0.4% in Q3, down from +0.5% in the previous 3 months.

This has also hurt the euro, because this weak business activity cuts the odds that the European Central Bank will hike Eurozone interest rates in the near future.

As a result, the pound to euro interbank exchange rate has hit this 1-week high, and may fly higher, looking forward!

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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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