Pound hits seven-year high against Euro

The pound has reached it's highest exchange rate against the Euro for more than seven years, a day after the European Central Bank (ECB) began its government bond buying programme.

Sterling rose 1% to hit €1.40 for the first time since December 2007. Last year, the pound was trading at €1.205

City analysts said continued fears over a Greek exit from the eurozone had also helped push the pound higher against the single currency.

Jeremy Cook, chief economist and head of currency strategy at foreign exchange traders World First, said alongside concerns over Greece, the ECB's bond buying programme and negative bank deposit interest rates were "hammering" the single currency.

The ECB began its €60bn (£42.8bn) monthly bond buying programme on Monday.

Obviously the pound being high against the Euro is good for inflation and but makes life more difficult for British exporters selling to Europe.

However, the full picture of what is happening is far better described as a drop in the Euro than a rise in the pound: the dollar has also risen against the euro. Against the dollar the pound is stable or falling slightly. The fact that Britain has our own currency means that we balance out against the two and the overall position of our currency on world trading markets is fairly stable.

Comments

Jim said…
With a currency you would always have to measure at least 3 together to see the real cause. as you say, its not a rise in the Pound its a fall in the Euro.

Much like inflation, take everything else against the pound and you pretty quickly work out, its not everything else gaining value, its the pound loosing value.
6:11 pm
Chris Whiteside said…
And this one is the Euro losing value.
5:04 pm
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