Pound hits another 7-year high versus euro, as Grexit fears grow

The pound has touched yet another 7-year high against the euro today, at 1.3776.

by Jane Fisher

The UK pound has touched yet another 7-year high against the euro today, at 1.3776, its strongest since December 21st 2007. This is chiefly thanks to growing doubts that Greece will still be part of the Eurozone at the end of this year.

For instance, sterling has climbed versus the euro, because the head of European sovereign ratings at Standard & Poor’s Moritz Kramer has said today that “The original cohesion that has been driving [Greece’s extreme-left wing Syriza government] may start to become a little more brittle. It will become an increasingly difficult balancing act for [Prime Minister Alexis] Tsipras to hold his coalition together.” This suggests that the political climate in Greece is fragile at best, putting into doubt Greece’s future in the euro.

Moreover, the euro is also falling today, because Germany’s patience with Greece is apparently coming to an end. Germany’s biggest-selling tabloid Bildzeitung this week published a headline “No more billions for greedy Greeks.” Meanwhile, German finance minister Wolfgang Schäuble this week expressed his doubts that Greece’s government can be trusted to meet its commitments, saying “There’s a lot of doubt in Germany.” This also weighs on Greece’s euro membership today, thereby weakening the common currency.

Pound hits another 7-year high, as UK growth confirmed at +2.7%

UK sterling has hit yet another 7-year versus the common currency today, at 1.3685.

by Jack Smith

UK sterling has hit yet another 7-year versus the common currency today, at 1.3685, its strongest since December 21st 2007. The pound has risen, because UK economic growth for 2014 was confirmed at +2.7% today, the most since the financial crisis, while European Central Bank chief Mario Draghi yesterday warned that the Eurozone’s monetary union is structurally incomplete.

Sterling continues to rise, first because it was confirmed this morning that the UK economy grew +2.7% last year, according to the Office for National Statistics. This was Britain’s fastest annual growth rate since the 2008 financial crash, and so bodes well for the UK’s economic trajectory, thereby lifting sterling.

At the same time, the euro remains on the back foot, because yesterday president of the European Central Bank Mario Draghi told the European Parliament that “We have not yet reached the stage of a genuine monetary union.” Mr. Draghi emphasised that, unless the 19 members of the currency bloc agree to share further economic sovereignty, this “puts at risk the long-term success of the monetary union.”

Equally, European Central Bank executive Luc Coene also brought the future of the euro into doubt yesterday, by telling Dutch newspaper De Telegraaf that "If a country decided to leave, why shouldn't it be allowed to happen? I can't imagine what country that would be, but theoretically that can always happen." This also brought the euro low.

Pound nears new 7-year high versus euro, as BoE hints at rate hikes

The pound is rising, as the Bank of England hints that it may hike interest rates.

by Brian Miller

Sterling stands at the border of a new 7-year high versus the euro today, at 1.3655, just one tenth of a cent from its highest since December 21st 2007. This is chiefly because several members of the Bank of England’s Monetary Policy Committee (MPC) have hinted that UK interest rates may rise quicker than financial markets currently expect. Sterling also rose today, because UK mortgage approvals jumped for the first time since June last month, according to the British Bankers’ Association (BBA.)

Sterling is rising versus the euro today, first because the minutes of the MPC’s interest rate meeting this month showed that two members of the nine-person committee thought that the decision whether to hike UK interest rates was “finely balanced.” This indicates that the BoE is moving closer toward hiking UK interest rates, which would in turn make British investments more profitable, and so lift the pound.

Moreover, MPC member Martin Weale said in written testimony to Parliament’s Treasury Committee yesterday that it may be “appropriate to raise bank rate rather earlier than financial markets currently anticipate.” This reflects recent comments by MPC member Kristin Forbes that UK interest rate hikes may be needed “in the near future,” and so therefore adds to expectations that the Bank of England will increase borrowing costs sooner rather than later. Hence, the pound’s momentum.

Meanwhile, sterling also holds an advantage over the common currency, because UK mortgage approvals rose +36,400 last month, according to the BBA, +200 more than forecast, and the first increase since June 2013. This indicates that there’s still momentum behind the UK’s housing market, which will contribute to Britain’s economic growth.

Pound continues to hit new 7-year highs, as Eurozone deflation deepens

It's the best time to exchange pounds for euros since December 21st 2007 today.

by David Pewes

The pound to euro exchange rate has reached 1.3664 this morning, a new 7-year high, sterling’s strongest since December 21st 2007. This is largely because the Eurozone continued to fall further into deflation in January, while a second estimate of German growth figures for Q4 failed to rise, disappointing some investors.

Sterling continues to climb versus the euro, because Eurozone inflation fell –0.6% in January compared to last year, according to official statistics body Eurostat today. This confirms that the price of goods and services in the currency bloc continues to fall, thereby risking outright deflation, widely associated with economic stagnation. Hence, the weak euro.

In addition, the pound has hit this new 7-year high versus the euro, because a second estimate of German economic growth, released today by Statistisches Bundesamt Deutschland, confirmed that Germany grew +0.7% in the last three months of 2014. This disappointed some investors, who’d hoped that Germany’s growth would be revised up. This has also weakened the euro today, to sterling’s advantage.

Pound a quarter cent below 7-year high, as German IFO disappoints

Sterling has hit 1.3605 today, right next to its strongest versus the euro in 7 years.

by Sam Hewitt

The UK pound is gravitating towards a new 7-year high versus the euro today, having climbed +0.58% to reached 1.3605, just a quarter cent below its strongest since December 21st 2007. This is chiefly because February’s assessment of the Germany economy, released today by economic analysts IFO, disappointed financial investors.

Sterling is climbing today, because IFO’s assessment of Germany’s business climate, current assessment, and expectations all came in beneath forecasts this morning. In particular, IFO noted that German firms are worried about the political instability in Greece and Ukraine, given that Germany is an export-oriented economy. To make its assessments, IFO speaks to 7,000 German businesses each month. This thereby weakened the euro, because it suggests that Germany, the Eurozone’s largest economy, may not expand as strongly as previously thought in the near future.

Pound to euro exchange rate hits new 7-year high, most since Dec 2007

Sterling has hit its highest versus the euro since Dec 21st 2007 today, at 1.3619

by Peter Lavelle

The UK pound continues to hit new record highs against the euro today, touching 1.3619, its strongest since Decembr 21st 2007, or 7 years and 2 months. Sterling is rising, because UK retail sales continued to grow strongly in December, while the UK government achieved its biggest surplus since 2008 last month. Meanwhile, Germany’s crucial manufacturing sector neared stagnation for the second consecutive month in February, weakening the euro.

Sterling is flying, because UK retail sales rose +5.4% in January compared to the same time last year, according to figures released today by the Office for National Statistics. This was –0.5% less than forecast, yet nonetheless signals that British consumers feel comfortable shelling out, lifting both the UK economy and sterling.

Moreover, the pound is also climbing today, because the UK government achieved a budget surplus of £8.8 billion in January, the most since the start of the financial crisis in 2008. In total, this means the Coalition has borrowed £74 billion so far this financial year, -£6 million less than this time in 2014, and is thus succeeding in reducing the UK’s deficit. This also boosted the pound.

Meanwhile, the euro is on the back foot today, because Germany’s vast manufacturing bloc almost stagnated for the second consecutive month in February, according to economists Markit. German factories expanded just 50.9 this month, well below the 51.5 forecast, and dangerously close to the 50.0 that divides growth from contraction. This therefore brought down the euro today.

Pound to euro exchange rate steady at 1.3540, close to 7-year high

At 1.3450, the pound is less than a cent from its recent 7-year high.

by Jane Fisher

The pound is holding around 1.3540 versus the euro today, less than a cent below its strongest in a full 7 years, or since December 21st 2007. Sterling isn’t moving much because, while UK manufacturers grew more optimistic in February, Greece looks to have reached a deal to remain in the Eurozone, leaving sterling and the euro at even-stevens.

Sterling has received a lift today, because the mood among UK manufacturers climbed to +10 this month, according to the Confederation of British Industry, ahead of forecasts for +6. This suggests that British factories feel that economic conditions are set to improve in the immediate future, and hence bodes well for the UK economy, lifting sterling.

However, the euro has also strengthened today, because the deadlock between Greece and the Eurozone has at last been broken, as Greece has agreed to seek a 6-month extension to pay back its loans. Greece hopes to use these 6 months to renegotiate the terms of its bailout, but in the meantime, the threat of Greece exiting the euro has now lessened, thereby lifting the common currency.

Pound touches new 7-year high versus euro, as UK joblessness falls

by Jack Smith

The pound has surged to 1.3577 versus the euro today, a new 7-year high, its strongest since December 21st 2008. Sterling has climbed, chiefly because UK wages rose more than forecast in January, while British unemployment unexpectedly fell to its least since 2008, at just 5.7%.

Sterling has climbed, first because UK wages including bonuses rose +2.1% last month, according to the Office for National Statistics, well ahead of the +1.7% forecast. This lifted the pound because, given that UK inflation fell to an all-time low of just 0.3% last month, British consumers’ spending power will now increase, fuelling Britain’s economic comeback.

Moreover, the pound also jumped, because UK unemployment surprisingly fell to a new 6-year low of just 5.7% in the 3-months to December, according to the ONS, exceeding forecasts it would remain stable at 5.8%. This boosted sterling, because there were -97,000 fewer jobless people in the UK between October, bringing the jobless total down to just 1.86m, and so brightening the UK’s economic outlook.

Pound drops –0.75% versus euro, as UK inflation hits all-time low

by Brian Miller

Sterling has fallen –0.75% versus the euro today to as low as 1.3435, and is now more than a cent below its recent 7-year high. The pound has lost out, chiefly because UK inflation hits its lowest since records began in 1989 last month, while German investors have grown unexpectedly upbeat about the current financial outlook.

The pound has declined today, because UK inflation fell to just 0.3% in January, according to the Office for National Statistics, –0.2% lower than the month before, and the lowest since records began in 1989. This weakened sterling, because with inflation low, it greatly cuts the odds that the Bank of England will hike UK interest rates in the foreseeable future.

Moreover, looking forward, sterling may continue to lose out, because UK inflation is expected to drop further in coming months. For instance, Capital Economics analyst Paul Hollingsworth said today that “We think that a brief period of deflation is imminent,” as UK energy companies factor in the recent dip in oil prices, as well as falling food costs.

Meanwhile, sterling also finds itself on the back foot versus the common currency today, because German investors grew unexpectedly upbeat about the current financial outlook this month, according to economics body ZEW. ZEW’s current situation figure hit 45.5 this month, well ahead of the 30.0 forecast, indicating that German investors think the immediate future is bright. This is the fourth consecutive month that the ZEW index has risen, and so could weigh on sterling versus the euro.

Pound falls -0.4% versus the euro, as Eurozone trade surplus rockets

by David Pewes

UK sterling has fallen -0.4% to 1.3472 versus the euro today, although it still remains just a cent from its highest against the common currency in 7 years, or since December 21st 2008.

The pound has fallen, chiefly because the Eurozone recorded an unexpectedly large trade surplus in December. The trade surplus of the 19-nation currency bloc hit +€23.4bn in the last month of 2014, according to official statistics body Eurostat. This was +€3.8bn more than forecast, the fifth consecutive monthly rise, and the Eurozone's largest trade surplus on record.

The Eurozone trade's surplus rose, chiefly because exports jumped +8.0% in December compared to 12 months before, while imports rose just +1.0%. This suggests that Eurozone firms are benefiting greatly from the low value of the euro, and so selling more good abroad. This thereby lifted the euro because, in spite of the Eurozone's current weakness, it nonetheless bodes well for the currency bloc's economic future.

Pound steady at 1.3485 versus euro, although Europe grows faster

by Sam Hewitt

Sterling has held its ground versus the euro today, standing close to 1.3485 throughout the day, just half a cent from its highest in 7 years, or since December 21st 2008. This is in spite of the fact that the Eurozone economy, and Germany’s especially, expanded more than expected in the last three months of 2014.

The pound has held firm versus the euro today, although the common currency bloc grew +0.3% in Q4, says official statistics body Eurostat, more than the +0.2% forecast. In particular, Germany’s economic growth exceeded even the most optimistic forecasts, hitting +0.7% between October and December. According to UniCredit Chief Economist Andreas Rees, this may reflect “consumers spending more because of lower energy costs, record-high employment and rising wages.”

Sterling hasn’t weakened versus the euro today however, in spite of this upbeat economic news from the continent. This may reflect the continuing uncertainty about Greece’s future in the eurozone, overshadowing the Eurozone’s unexpected economic momentum. Right now for instance, just two weeks remain before Greece must receive a €7bn bailout tranche, without which it will go bankrupt, and will almost certainly be forced out of the Eurozone. With this worry, it’s hence no surprise that sterling retains the upper hand versus the euro.

Pound hits new 7-year high versus euro, as Carney points to rate hikes

by Peter Lavelle

The UK pound has hit 1.3559 versus the euro today, its highest since December 21st 2008, or more than 7 years.

Sterling has climbed, chiefly because governor of the Bank of England Mark Carney has presented an upbeat view of the UK’s economic outlook at today’s Inflation Report, even going so far as to suggest that the central bank may hike interest rates sooner than currently forecast.

Mr. Carney said today that the sharp drop in oil prices in recent weeks would significantly boost consumer spending in the UK, insofar that cheaper oil gives people more spending money. Given this, the central bank upgraded its prediction for UK economic growth in 2016 by +0.3%, to 2.9%.

Moreover, the Bank of England’s governor added that if the UK’s economy continues to recover strongly, “it would be appropriate for Bank Rate to increase more quickly than embodied in current market yields.” This raises the prospect of higher UK interest rates sooner, thereby boosting sterling.

Best time to exchange pounds for euros since Dec 28th 2007, 7 years

by Jane Fisher

UK sterling has touched its strongest versus the euro since December 28th 2007 today, or more than 7 years, at a peak of 1.3536.

The pound has risen, chiefly because it remains to be seen whether Greece will still be part of the Eurozone at the end of this month. Today for instance, both Greek prime minister Alexis Tsipras and finance minister Yanis Varoufaki released statements rejecting the term’s of Greece’s bailout, putting Athens on a collision course with the rest of Europe.

Mr. Tspiras for example told the Greek parliament today that “We are not negotiating the bailout; it was cancelled by its own failure.” This followed a confidence vote in Mr. Tspiras’s government, in which 162 of 300 Greek MPs voted to continue supporting his anti-austerity platform.

Meanwhile, Greece’s treasurer Mr. Varoufaki has insisted that “Greece's debt cannot be paid off in the near future.” This statement comes ahead of a meeting between Mr. Varoufaki and other Eurozone finance ministers this week, to discuss Greece’s bleak financial future.

With this in mind, the pound has exceeded its 7-year high versus the euro!

Sterling jumps close to 7-year high, as UK growth accelerates

by Jack Smith

British pound sterling has strengthened +0.46% versus the euro today to reach a peak of 1.3495, less than a tenth of a cent from its highest in 7 years, or since January 25th 2008.

Sterling has risen, chiefly because the UK economy unexpectedly accelerated in the 3 months to January, according to economic group NIESR (National Institute for Economic and Social Research.) Britain’s economy expanded +0.7% between November and January, +0.2% faster than in the last three months of last year. Moreover, NIESR now forecasts that the UK will expand +2.9% this year, +0.3% faster than 2014. This suggests that, far from the UK economy winding down, it’s in fact gearing up in 2015. This thereby lifted the pound.

Elsewhere, the pound also rose today, because the UK’s manufacturing sector grew +2.7% in December compared to 12 months ago, according to figures from the ONS (Office for National Statistics) today, the most since 2010. This further adds to the upbeat atmosphere about the UK’s economy this year.

Lastly, the euro has weakened today, because German Chancellor Angela Merkel has rejected the possibility of changing Greece’s bailout conditions. Speaking at a press conference, Mrs. Merkel said that the existing bailout must be “the basis of any discussions that we have”. Given that Greek prime minister Alexis Tsipras was elected with a mandate to end the bailout, this hardens the divisions between Athens and Berlin, boosting the risk that Greece may eventually leave the Eurozone.

Sterling close to 7-year high versus euro, as threat of Grexit looms

by Brian Miller

UK sterling stands almost unchanged versus the euro today at 1.3475, just a quarter of a cent from its strongest since January 25th 2008, or 7 full years.

The pound remains close to this 7-year high, because several politicians released statements over the weekend highlighting and even increasing the risk that Greece may soon exit the Eurozone.

Euro weakens, as Tsipras rejects bailout

For instance, Greek prime minister Alexis Tsipras, in his first major speech in Greece’s parliament, rejected the austerity policies imposed on Greece during the past few years. Mr. Tsipras said that "After five years of bailout barbarity, our people cannot take any more,” and refused to extend Greece’s €240 bailout, due to expire on February 28th.

Euro declines, as Juncker challenges Greece

Meanwhile, the president of the European Commission Jean-Claude Juncker has said that Greece cannot expect that the rest of Europe will simply accept whatever conditions it proposes. Mr. Juncker told journalists that "Greece should not assume that the overall mood has so changed that the euro zone will adopt Tsipras's government program unconditionally."

Clearly then, this puts Athens and Brussels on a collision course. Neither side seems prepared to compromise, increasing the risk that Greece will eventually exit the Eurozone.

Euro falls, as Greenspan predicts Grexit

What’s more, globally-respected economist and former head of the US Federal Reserve Alan Greenspan gave his two cents over the weekend, arguing that Greece’s exit from the Eurozone is inevitable. Mr. Greenspan said that "Greece will leave the Eurozone. I don't see that it helps Greece to be in the Euro, and I certainly don't see that it helps the rest of the Eurozone.”

With this in mind, the pound remains close to its 7-year high versus the euro today.

Pound slides -0.5% against euro toward 1.33, as Eurozone rebounds

by Sam Hewitt

British sterling has slid -0.5% against the euro to a low of 1.3311 today, as the Eurozone's economic climate has unexpectedly improved, according to the most recent data.

Pound slides, as German factory orders rebound

Sterling has lost out for instance, because German factory orders rocketed +4.2% in December, according to the official Deutsche Bundesbank, easily outdoing the +1.5% forecast. This suggests that the Eurozone's largest economy has shrugged off its recent downturn, is set to perform well in early 2015.

Sterling drops, as Eurozone retail sales near 8-year high

What's more, the pound also fell, as retail sales in the Eurozone climbed at the fastest annual pace since March 2007 at the end of last year, by +2.7%, says the European Commission. This indicates that consumers in the currency bloc have more money to spend since the recent dramatic fall in oil prices, and will contribute positively the Eurozone's growth.

Eurozone economic activity grows at fastest clip in 6 months

In addition, economic activity in the Eurozone's services, manufacturing and construction sectors rose at the quickest pace since in 6 months, according to economic surveyor's Markit. Activity in the 19-member bloc reached 52.6 in January, says Markit's PMI (Purchasing Manager's Index), where any figure above 50.0 points to growth, and the higher the better.

Pound weakens, as EC upgrades Eurozone growth outlook

To top it all off, sterling also dived today, because the European Commission has upgraded its 2015 growth outlook for the Eurozone, just 3 months after it previously downgraded it. Now, the EC thinks the common currency bloc will expand +1.3% this year, +0.2% more than previously thought. According to Pierre Moscovici, the EU’s economic chief, low oil prices and a declining euro are "a welcome shot in the arm" for Europe's economy.

Pound exceeds 1.33 versus euro, as UK services surge in January

by Dave Pewes

The UK pound has jumped +0.8% to exceed 1.33 versus the euro today, hitting an intra-day peak of 1.3318, as the UK's enormous services sector unexpectedly accelerated in January.

Sterling strengthens, as UK services rebound

UK services activity surged to 57.2 last month, according to economic statisticians Markit, faster than the most upbeat economic forecast, and more than compensating for December's decline to a 17-month low. According to Markit's index, any number above 50.0 points to economic growth, with the higher the better.

UK off to "reassuringly robust start" to 2015

This boosted sterling versus the euro, because, according to Markit economist Chris Williamson, the data points to "a reassuringly robust start to the year for the UK economy. The data will allay fears that the economy is slowing sharply, having merely seen growth cool during the winter to a more sustainable pace."

Services employment sub-index 2nd best in 19 years

In particular, sterling jumped, as the UK's services employment sub-index rocketed to 57.1 in January, the joint-second highest figure since date began to be compiled, 19 years ago. This bodes especially well for the UK's job market in 2015, and may point further gains both for Britain's economy, and the pound, in the months to come.

Sterling slides -0.33% versus euro to 1.32, weakest since January 21st

by Peter Lavelle

Sterling has continued its week-long side versus the euro today, dropping -0.33% to just 1.32, its weakest since January 21st, or a fortnight.

The pound as weakened, in spite of the fact that UK construction activity unexpectedly accelerated in January, while producer prices in the Eurozone fell further.

Sterling drops, in spite of UK construction pick-up

The pound to euro exchange rate has dropped to 1.32 today, although Britain's construction sector rose to 59.1 last month, according to Markit's closely-watched measure of economic activity. This 59.1 was above all forecasts, and signals that UK construction may be picking up in early 2015. According to Markit's measure, any number above 50.0 points to expansion, and the higher the better.

In particular, UK construction firms may be buoyed by the fact that new orders rose at the fastest pace in three months in January, while industry optimism also rose for the first time since October. Tim Moore, senior economist at Markit, noted that "In short, the peak speed of the construction recovery seems to be over, but reports of its death have been greatly exaggerated."

However, sterling weakened versus the euro today, in spite of this good news. This may be because construction accounts for just 6% of UK economic activity, and so is unlikely to widely boost the overall economy.

Euro rises, in spite of falling producer prices

Moreover, sterling also lost out versus the euro today, in spite of the fact that industrial producer prices fell -1.0% in the Eurozone in December. This signals that industrial firms on the continent paid less to produce their goods over Christmas 2014, and so will contribute to deflation in the currency bloc. Given this, it's also surprising that sterling has lost out versus the euro.

Pound weakens to 10-day low versus euro, as UK factories cut prices

by Jane Fisher

UK sterling has fallen -0.86% versus the euro today to its weakest in 10 days, or since January 23rd, at 1.3216.

The pound has declined, both because UK factories cut their prices at the fastest pace since 2009 last month, raising the chances of deflation in Britain, and because investors are betting that Greece will ultimately stay in the Eurozone.

Pound weakens, as UK factories drive deflation

Sterling has lost out versus the euro today, first because UK factories cut their prices -0.9% in January, the fastest pace since September 2009, according to official figures from the Office for National Statistics today.

This weakened the pound, because it's likely to further drive down the rate of inflation in the UK, which in December hit a multi-year low of just 0.5%. In turn, this puts less pressure on the Bank of England to hike interest rates above their current record low of just 0.5%, which will thus limit the profitability of investing in the UK, and so cut demand for the pound. Hence, sterling's weakness today.

Moreover, the pound also fell today, because in January the UK's factory sector failed to grow at a pace that will meaningfully add to economic growth. UK factory expansion hit 53.0 last month according to Markit, above the 50.0 that divides expansion from contraction, yet too slow to drive the British economy. Markit economist Rob Dobson for instance notes that "At this rate, the sector will provide little meaningful boost to the economy in the first quarter."

Euro rises, as Greek government assures will stay in euro

What's more, the euro has strengthened today, because Greece's new government has sought to assure investors and the international community that it intends to stay in the Eurozone. This weekend, Greek prime minister Alexis Tsipras told journalists that "I am absolutely confident that we will soon manage to reach a mutually beneficial agreement, both for Greece and for Europe as a whole."

This strengthened the euro, because it assures investors that Greece's priority is to remain in the common currency bloc, and that fears of an accidental "Grexit" are overblown.

Sterling jumps versus euro, as Merkel unlikely to forgive Greek debt

by Jack Smith

Sterling has strengthened +0.22% versus the euro today to hit 1.3330, less than two cents from its highest in more than seven years, or since January 25th 2008.

The pound has climbed, because German chancellor Angela Merkel has signalled her opposition to cutting Greece's debt, putting her on a collision course with Athen's recently elected government. Speaking today, Mrs. Merkel told journalists that "I don't see a further debt haircut for Greece," which currently has a public debt of €320 billion, or roughly +175% of GDP.

This conflicts with the approach of Greece's freshly formed government, led by extreme left-wing party Syriza, which aims to reduce Greece's debt without the Hellenic nation leaving the Eurozone. For instance, Greek finance minister Yanis Varoufakis said today that "We are not prepared to carry on pretending and extending, trying to enforce an unenforceable programme which for five years now has steadfastly refused to produce any tangible benefits."

Hence, this lifted the pound, because it suggests that Mrs. Merkel has taken a hard-line approach to Greece's debt, that will be difficult to reconcile with the hopes of Athen's new government. If a compromise is unable to be found, this lifts the odds that Greece may eventually leave the currency bloc.