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.
