Pound edges towards a seven-year high against the euro
The pound rose as much as 0.5 per cent against the euro this morning, pushing it close to its highest since 2008.
One euro now costs close to 74.1p, near the 74.3p it cost on Valentine's Day 2008.
The rise followed encouraging data from the UK's manufacturing industry. Official data published this morning showed manufacturing production grew 2.4 per cent year-on-year during December, although the month-on-month figure showed less impressive 0.1 per cent growth.
The euro has been weakened in general by fears of a Greek exit from the euro, the chances of which have now been put at 5/4, after the country's new Prime Minister, Alexis Tsipras, insisted he will stick to pre-election pledges not to extend Greece's bailout when its current facility expires at the end of February.
That has added to losses felt when the European Central Bank launched its €1.1 trillion quantitative easing programme last month in an effort to hold off deflation.
Martin Beck, a senior economic adviser to the EY Item Club, pointed out that a strong pound is likely to hit UK businesses.
With sterling strengthening by over 7 per cent against the euro since the end of November to reach a seven-year high, along with growing turmoil in the currency block over the possibility of ‘Grexit’, UK industry is unlikely to receive much support from overseas anytime soon.