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Euro to Pound Exchange Rate Near 7-Year High as Brexit Fears Damage Sterling

Having declined against the Pound on Thursday morning, the Euro has since made a slight gain on growing Brexit uncertainty.

The EUR GBP exchange rate has risen to 0.9052, following signs of animosity between UK and EU negotiators.

The latest news has seen mixed signals from the UK government – seemingly Prime Minister Theresa May is aiming to harden the UK’s negotiating position, but also launch a ‘charm offensive’ among EU officials.

A potential setback has come from an anonymous UK civil servant, who has claimed that EU officials have been denying the UK team water during talks.

(Last updated 16:20, August 10th, 2017)

While the Euro has fallen by -0.3% against the Pound today, the pairing remains near the best rate since March 2010. The latest Euro weakness has been caused by US Dollar strength, following a recent wobble on North Korean news.

  • EUR GBP rate drops to 0.9014 – GBP EUR trades up at 1.1092
  • Euro slides as US Dollar strengthens – Falling French production also weakens EUR
  • Pound appreciates on production figures – UK trade balance hits 9-month high
  • Euro could recover on higher German inflation – UK inflation stats also out in near-term

Eurozone domestic data has been limited today, which has left the appreciation of other currencies as a dominant factor.

Euro Devalued by Stronger US Dollar after Nuclear Scare

Today’s Euro to Pound drop is a result of the US Dollar appreciating, following an initial USD drop on Wednesday.

With the long-time Euro rival seeming a more attractive option to traders, this has led to the Euro being devalued by comparison.

Eurozone news today has been limited and negative, covering levels of industrial production in France. On the month in June, a slump from 1.9% to -1.1% has been seen.

This result has been worse than the expected -0.4% result and follows a recent pattern of rising production one month and falling production the next.

The recent USD rise follows fears about a US nuclear conflict with North Korea. The chances of this worst-case outcome have been raised by escalating rhetoric on both sides of the argument.

Pound Advances despite 9-month High for Trade Deficit

The Pound has made a moderate gain against the Euro today, briefly touching an exchange rate of 1.1100.

This positive movement comes after the release of UK trade balance and production data for July. The trade figure has been decidedly negative, showing a deficit expansion from -2.52bn to -4.56bn.

This was the biggest figure recorded in nine months and led to a comment from Suren Thiru. The British Chambers of Commerce’s Head of Economics, Thiru declared that;

‘Businesses continue to report that the slump in the value of Sterling since the EU referendum remains something of a double-edged sword, as many exporters are also importers, and so face higher input costs due to the weakening currency.

While stronger global economic growth may help to boost the UK’s export performance over the second half of the year, it is unlikely to be sufficient to prevent an overall weakening in growth’.

The slightly more positive news was that levels of construction and manufacturing had risen in June, as had the industrial production measure.

Looking at the bigger picture, this growth paled in comparison to pre-Brexit figures, but still represented a small step forward on the road to recovery.

Euro to Pound Rally Possible on German Inflation Figures

Rounding off the week’s Eurozone announcements will be German inflation rate figures, due on Friday morning.

The Euro may well advance on the news, as inflation is expected to rise on the month and the year in July. As well as putting the German economy in a positive light, such results could also raise trader expectations of a European Central Bank (ECB) interest rate hike in the coming months.

UK inflation figures are also out shortly, but not until the coming Tuesday. In the UK’s case, falling inflation could inspire Pound gains as it might lessen the strain on real incomes.

Current Interbank EUR GBP Exchange Rates

At the time of writing, the Euro to Pound (EUR GBP) exchange rate was trading at 0.9015 and the Pound to Euro (GBP EUR) exchange rate was trading at 1.1092.