The pound had a strong week against the euro, climbing to around 1.1741 — its highest in about two and a half months. Most of the move came from euro weakness rather than pound strength: nervousness in France’s government bond market put the single currency under real pressure, making it the weakest of the major currencies this week.
Several banks think those French worries could linger for the rest of the year, which would keep the euro on the back foot. Against the US dollar, the pound was fairly steady, holding near 1.3209.
Closer to home, there’s a bit of extra support for sterling. Upbeat news on the UK economy — growth for the spring was nudged up to 0.5% — has reinforced expectations that the Bank of England could raise interest rates in November, which tends to help the pound.
There’s also been some positive mood music around a warmer UK–EU relationship. The one thing to keep an eye on is the wider jitters in government bond markets, which could still knock the pound against the dollar if they flare up again.
A couple of key figures are due later today — eurozone inflation and the big US jobs report — and either could stir things up. In short, the pound is on the front foot against the euro for now, but today’s numbers will be the real test of whether it holds.