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Pound Nears 2-Week High Versus Euro, as UK Services Accelerate

Market CommentaryPound Nears 2-Week High Versus Euro, as UK Services Accelerate
Pound Nears 2-Week High Versus Euro, as UK Services Accelerate
Image credit: Sam Segar.

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

Sterling climbs versus the common currency! The pound to euro interbank exchange rate has hit 1.1170 today, close to its highest in near 2 weeks, or since December 25th.

By contrast, back on January 1st, sterling was as low as 1.0988 versus the common currency, so it's since risen by +1.65% or +1.75 cents.

To put this into context, £250,000 transferred to the Eurozone at this exchange rate would be worth €279,250, or €4,550 more than a week ago!

So if you're a Brit thinking of emigrating to France, or buying a property in Spain, this may be helpful information for you.

Pound Strengthens, as UK Services Beat Forecasts

The pound to euro interbank exchange rate has risen, because the UK's dominant services sector expanded more than predicted in December, said trusted data last Friday.

According to IHS Markit's monthly survey of UK services activity, output hit 51.2 last month, above both financial market forecasts for 50.7, plus November's figure of 50.4.

In particular, IHS Markit signalled "modest rises in business activity and new work" among UK services firms.

This tells us that the UK economy continues to expand, even with Brexit uncertainty, thereby bolstering the pound!

Euro Weakens, as Eurozone Inflation Eases

What's more, the pound to euro interbank exchange rate has also neared this 2-week high, because Eurozone inflation eased more than forecast in December.

Price pressures in the common currency bloc fell to 1.6% last month, said official statistics agency Eurostat on Friday, below both expectations for 1.8% inflation, plus November's 1.9%.

This was because of a sharp fall in the cost of imported commodities, like oil, food, alcohol and tobacco, said Eurostat.

As a result, the European Central Bank will feel less pressure to hike interest rates sooner, thus hurting the euro!

Euro Loses Out, as Eurozone Business Activity Wobbles

Moreover, sterling has also risen versus the common currency, because the Eurozone's business activity slowed further in December, said respected data last week.

Output in the Eurozone's services, manufacturing and construction sectors reached just 51.1 last month, according to IHS Markit on Friday, close to the 50.0 figure that signals stagnation, and a 4-year low.

"The eurozone economy moved down another gear at the end of 2018, with growth down considerably", said Chris Williamson, chief business economist at IHS Markit about the data, in turn weighing on the euro!

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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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