The pound inched closer to its highest level against the euro since Brexit as ongoing struggles in major European economies weighed on the single currency.
Sterling rose 0.1% against the euro, with the euro valued at 82.3p—its weakest level since March 2022. A drop below 82.03p would mark the euro’s lowest value against the pound since June 24, 2016, the day of the Brexit referendum result.
Jane Foley, head of FX strategy at Rabobank, commented: “Over the past few weeks, a question has emerged, perhaps among the mainstream press, about whether euro-sterling could finally return to pre-referendum levels. This stems from a perception that the ECB is prioritizing growth—or rather struggling with a lack of it—amid political challenges in France and Germany.”
Germany faces the prospect of a snap election next year following the collapse of its coalition government, while France’s political scene was shaken last week by Prime Minister Michel Barnier’s resignation after losing a no-confidence vote over his budget aimed at reducing the deficit in Europe’s second-largest economy.
Elsewhere, the pound pared some losses against the dollar, supported by US inflation data that reinforced expectations of a Federal Reserve interest rate cut next week. Sterling edged down 0.1% against the dollar to $1.276.
