By Jonathan Davies
The sterling today (Thursday) rose to its highest point against the euro since November 2007.
The pound increased by 0.4% to €1.4339 as markets continue to speculate over potential interest rate rises.
Both Janet Yellen, head of the US Federal Reserve, and Mark Carney, Governor of the Bank of England, have increased rhetoric around potential moves. The US is expected to increase rates first in the autumn, but the UK is expected to make a move in early in 2016.
Earlier this week, Mr Carney said the point at which the central bank would raise interest rates was "moving closer".
The euro also fell 0.4% against the US dollar to $1.0904.
Jeremy Cook, chief economist at the international payments company, World First, said: "The euro remains weak despite the good news from Greece overnight. Nobody knows what damage the past month’s negotiations have caused for wider European growth prospects and I believe that the European Central Bank will end up maintaining its Quantitative Easing (QE) program past next September’s scheduled end. That will naturally lead to a lower euro and markets are pricing that in as we speak. I like GBPEUR higher throughout the year for these reasons and I maintain my 12 month target for the pair of 1.50.”
“Businesses and holiday makers would be minded to take advantage of the broad sterling strength at the moment; GBP has made fresh 7 year highs against the euro as well as the dollars of New Zealand and Canada and a 6 year high against the Aussie dollar. One of those last few may win the upcoming Rugby World Cup but the Home Nations are doing a lot better in the FX markets.”
