Know all about Sterling v Euro in review

2023 saw the least calendar year volatility for £-€ since 2018..

Let's begin by looking at the numbers for Sterling v Euro in 2023;

Mid-market high - 1.17
Mid-market low - 1.11
Average - 1.14
Increase in value - +2%

Previous to 2023, the last 5-years in a row had seen more than a 10-cent swing in this currency pair. Last year was much calmer, but we fully expect to see the usual high swing back for 2024. Interestingly with this pair, the last 3-years' low points have been almost identical..

Looking quickly at 2022;

Mid-market high - 1.21
Mid-market low - 1.11
Average - 1.16
Decrease in value - -6%

Remember, the above are 'inter-bank rates' and so the high and low points stated, would both be lower to you as the consumer when calculating any concrete figures.

To note - The highest £-€ has been over the last 5-years is 1.21 back in March 2022 and the lowest was 1.05 in March 2020. This is useful to know when looking at where current trading levels could be in a cycle.

So what can we expect for 2024?

The last 2-years has seen the 'seesaw' effect, whereby one half of the year is the opposite to the other. The rate was high in H1 2022 and then low as a whole the second half. The rate started low last year, but ended high as a whole in H2. At least there has been some consistency to follow with the pair..

Also last year, GBP was the best performing currency of 2023 up until August, when it became clear the BoE wouldn't need to raise interest rates much further in the cycle. However, £ struggled to gain against the Euro up until this point and it was only because of poor EU growth figures in Q4 that it eventually did.

In fact, the Euro was only beaten by Sterling, CHF & SEK last year and so the single currency is considered 'strong' due to the ECB's aggressive interest rate hiking path last year. But what goes up, must come down as they say and that goes for both the UK/£ & EU/€.

8 out of 10 of the biggest FX market forecasters are expecting GBP v EUR to strengthen slightly in the first half of the year, before potentially falling off a cliff the second half which is when the BoE are suggested to start cutting interest rates.

1.18 is the highest worthwhile mid-market forecast we have seen, but a significant low of 1.09 has been cited by a couple. The market swing makes sense, it's just about whether or not GBP can strengthen close to the psychological barrier of 1.20, to keep it potentially higher for longer.

By Dan Waterman on January 05, 2024