Pound to euro interbank exchange rates finished last week at their highest point since December 13th, reaching a 2-month high of over 1.20. This welcome news for euro buyers but further unease for euro sellers, who have seen the pound making steady gains since the August 2019 lows of 1.0647. Sterling rose in part due to the belief the new Chancellor Rishi Sunak will be more liberal with his spending plans, and the resultant boost to the economy makes an interest rate hike more likely than a cut. Sterling improved on this news as a stronger or higher interest rate will often make a currency stronger as it makes it more attractive to hold by investors.
Data Heavy Week to Influence GBPEUR Rates
This week, there is a series of economic data releases which could prove vital to the pound to euro rate, including UK Unemployment and Inflation data, plus Eurozone Inflation data. The Eurozone has been struggling lately in economic terms as France and Italy both saw their economies contract in the final quarter, 0.1% for France and 0.3% Italy respectively. This worrying news has cast doubt on Eurozone economic strength and with the UK outperforming the Eurozone across the whole of 2019 in economic growth terms, is another reason for the pound to be stronger against the euro.
The Eurozone data will be keenly watched since the ECB (European Central Bank) has already embarked on a series of measures to boost growth including QE or Quantitative Easing, which is where a central bank buys government bonds or debt. This measure will often weaken a currency and the potential for this plan to be failing might undermine the euro ahead.
Pound to euro interbank rates remains above 1.20 as we enter the new week, but could face some challenges from UK and Eurozone data released this week.
If you have a position to buy or sell euros and wish for updates on the rates and the market, feel free to contact myself, Jonathan Watson, using the form below.