Pound strengthens against euro to 1 40

The currency hit a seven-year high against the euro.

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By :  ,  Financial Analyst

The pound rose to its highest level against the euro in more than seven years today (March 10th), reaching €1.40, its strongest since December 2007.

The European currency weakened after the European Central Bank (ECB) started its quantitative easing programme yesterday, amid ongoing concern over the future of Greece in the eurozone.

"Greek debt talks resume [on Wednesday] and fewer market participants believe that the can [will] be kicked more than a short distance down the Troika's road," Kit Juckes, an economist at Societe Generale, told the Daily Telegraph.

"It would take good news from Athens to trigger a move. Jeroen Dijsselbloem [head of the Eurogroup] continuing his spat with the Greek government hardly helps."

Euro/dollar parity

The weakening of the euro means UK holidaymakers to the eurozone will have around 15 per cent more spending power than a year ago.

The dollar also rose to a fresh twelve year high against the euro. Barclays, Deutsche Bank, ING and Credit Suisse all believe the euro will hit parity against the dollar before the end of this year.

The ECB started printing money on Monday to buy €1.1 trillion (£790 billion) worth of bonds in a bid to revive the eurozone economy.

Almost six years after the US Federal Reserve and Bank of England started their own quantitative easing (QE) programmes, the ECB expects that reducing the cost of credit will put Europe on the path to recovery. 

It will buy bonds worth €60 billion (£46 billion) per month until the end of September 2016 and possibly longer, purchasing euro-denominated investment grade securities issued by euro-area governments and agencies and European institutions.

Mario Draghi said the programme would be conducted until the EU can see "a sustained adjustment in the path of inflation".

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