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| Sterling has equaled its strongest versus the euro in 7 years and 3 months today. |
Sterling has equaled its strongest versus the euro in 7 years and 3 months today, or since December 7th 2007, at 1.3816. The pound has risen, because the UK’s enormous services sector hired at the second fastest pace on record in February, while fears of a Greek exit from the Eurozone have hit their highest in 2 years.
Sterling rises, as UK services hiring accelerates, though growth eases
Sterling has equalled its 7-year high versus the euro today, as the UK’s gigantic services sector hired new workers at the second fastest pace on record last month, according to economics body Markit. Markit’s measure of UK services hiring hit 57.1 in February, far above the 50.0 line that divides growth from contraction, and second only to last July’s all-time high. This lifted sterling, because it indicates that British services firms expect to be busier, pointing to faster economic growth in the UK.
Chris Williamson, chief economist at Markit, said that “The combination of relatively robust economic growth, the improving labour market and signs that wage growth will pick up in coming months suggests the Bank of England will come under increasing pressure to tighten policy later this year.”
However, in spite of this, UK services output in fact increased less quickly in February, according to Markit. UK services output hit just 56.7 last month, well into growth territory, yet below January’s 57.2 figure, as well as the 57.5 consensus forecast among economists. So this may take the shine off sterling a little.
Euro weakens, as fears of Greece exit from euro hit 2-year high
Moreover, the pound also touched 1.3816 today, because concerns that Greece will exit the Eurozone have reached a 2-year high, according to a new poll of investors by economics group Sentix. Sentix’s newest poll of 900 individuals and institutional investors found that there was a 37.1% chance that Greece will abandon the euro, far higher than last month’s 22.5% figure, and the most since March 2013.
Sebastian Wanke, a senior analyst at Sentix, noted that "The new aid programme for the country does not seem to be convincing, rather a Grexit is now bound to be a constant topic among investors for the months to come.” This is therefore helping to lift sterling to new heights versus the euro.
