Exchange rate - euros per pound

As per the BoE's daily spot exchange rate monitor, £1 returned €1.2052 at close of trading on 02 March 2022, comparing to a 52-week high which was recorded the following day, of £1 equal to €1.2083 (03 March 2022), and to a 52-week low of £1 equal to €1.1468 (19 April 2021). Over the five-year period through 2022-23, the value of the pound sterling against the euro is forecast to appreciate at a compound annual rate of 0.6%. Prior to the five-year period a major event occurred which resulted in a steep contraction in its trade weighted value following the UK electorate's decision to withdraw from the EU bloc - £1 returned €1.3039 on the day of the referendum vote (23 June 2016), a euro value the cost of a pound sterling has not surpassed since. In more recent years there has been some notable volatility in the exchange rate, as global currency markets have been rocked by the economic implications of the COVID-19 (coronavirus) pandemic.

In June 2016, the United Kingdom voted to exit the European Union. Following the vote, the pound sterling depreciated sharply against many major currencies, including the euro, amid instantaneous uncertainty across all corners of the UK market - the pound-euro exchange rate depreciated by 12.9% year-on-year in 2016-17 alone, with £1 returning €1.1905 on average. During 2016-17, the value of the sterling pound slumped to a near 31-year low on global currency markets, and was on course for its largest one-day loss since the BoE began to track the spot exchange rate, as panicking investors contemplated the prospect of life without EU membership. The exchange rate between the euro and pound has since remained low against historical standards, having fallen by a further 4.7% year-on-year in 2017-18 due to prolonged economic instability and lingering uncertainty that persisted. The rate of depreciation against the euro, however, did slow somewhat due to intermittent jumps in the value of the pound. For instance, the pace of UK wage growth without bonuses rose 3.1% in August 2018 - the then fastest monthly increase since 2009 - instilling a degree of confidence among pound traders. However, currency trader confidence was recurrently weighted by perceived negativity emerging from EU-exit negotiations, or lack thereof, including the September 2018 leak of "no-deal" EU withdrawal contingency plans, colloquially known as "Operation Yellowhammer", and stalled talks regarding the Irish border. Accordingly, the pound-euro exchange rate remained broadly flat in 2018-19.

Indicative of the unabating impact the UK's then impending EU withdrawal had on the currency market, the pound lost value against the euro for 13 consecutive days between 6 May 2019 and 22 May 2019 - this was the GBP's then longest losing streak against the euro since the euro began trading in 1999 - amidst speculation of former Prime Minister Theresa May's resignation and further Brexit-induced political uncertainty in consequence. Yet, towards the tail-end of 2019-20, political turmoil eased, to a certain extent. The December 2019 election confirmed Boris Johnson's premiership and Conservative Party rule and effectively, in all but name, confirmed the direction Brexit would take thereafter. Subsequent to numerous delays, the United Kingdom eventually left the European Union on 31 January 2020, marking the start of a transition period through December 2020 - the EU-UK Trade and Cooperation Agreement was ratified on 1 January 2021, whereby the United Kingdom gained independence and is not required to abide by EU law, unless otherwise specified. A degree of clarity over Brexit and a seemingly resilient economy pre-pandemic had prevented currency markets from spiralling further and, in 2019-20, the GBP-EUR exchange rate in fact improved by 0.9% year-on-year, with £1 averaging €1.1443.

However, recent wins among currency trading markets were offset by the fact that Brexit negotiations dragged until the final moments, meaning uncertainty persisted for an extended period. Moreover, the pound sterling suffered instantaneous and heavy losses due to coronavirus-induced turmoil for risk assets like stocks and commodities, as well as the currencies that underwrite them; however, the extent of the impression left on currency values was reflected in the pound's average annual value in 2020-21, when £1 averaged €1.1210 during the year, down 2% on an annual basis. On 23 March 2020, the pound tumbled to its lowest level on record - £1 equalled €1.0681 at close of trading - when weighted against the currencies of the UK's major trading partners, as the economic shock caused by the coronavirus pandemic blighted trader confidence and ripped through currency markets. As per the BoE's daily monitor, the sterling's broad effective exchange rate hit a record low of 72.9 index points, before exhibiting marked volatility thereafter. Nevertheless, the reading on 23 March 2020 was a reading weaker than at any time during the Brexit process, the financial crisis era, and even the UK's ejection from the European Exchange Rate Mechanism in 1992.

Relative to the euro explicitly, the pound sterling had lost more than 8% against the euro on 23 March 2020, since the start of the month, with the BoE's daily spot exchange rate monitor recording a 52-week low euro-pound exchange rate of £1 = €1.0681 - this compared to then-52-week high of €1.2046 and, as per latest available data at the time of publication, the €1.1656 reported by the BoE on 20 September 2021. The sterling was made extra vulnerable by the UK's departure from the EU bloc, while a burst of emergency stimulus and the government's relief package built atop Budget 2020 commitments, also turned investors more negative on the pound sterling's prospects, heightening the cost of acquiring euros with the Quid. While some central bankers were of the view that impulsive price action in some currency markets represented an overreaction to the coronavirus on the part of investors – some were of the perception that stabilisation in the pound sterling was due, as the initial shock of the pandemic passed its zenith - the coronavirus situation continued to evolve and the pound sterling, despite rallying towards to the tail-end of the fiscal year, remained depressed relative to historical levels. Overall, in 2020-21, the GBP-EUR exchange rate depreciated by 2.0%, with £1 returning €1.1210 on average during the fiscal year.

In respect to an aforementioned rally, and continuing an indicative H2 (October-March) 2020-21 recovery in the GBP-EUR exchange rate, the pound sterling exchange rate strengthened against the euro in 2021-22, with markets reacting well to: continued and extended financial support for both consumer and business markets, including welcomed measures in Budget 2021; the ongoing of a confirmed coronavirus vaccine with a high efficacy rate; the announcement and completion of the government's four-step roadmap to "offer a route back to a more normal life", which had been effect since 8 March 2021; the ratification of a conclusive UK-EU trade deal; and other seemingly positive news helping market sentiment to recover to a certain extent. In tandem with the reopening of the economy, and with markets working back towards a "normal" state, the GBP-EUR exchange rate rebounded by 4.9% in 2021-22, with £1 averaging €1.1758. This trend was also strengthened towards the tail-end of the year, due to the Russian invasion of Ukraine. On the day of the invasion, 24 February 2022, the pound sterling was considered a relative safe haven against the euro and it subsequently appreciated significantly on the day and has remained strong, reaching 52-week highs as of 03 March 2022. Over the current year, this trend is expected to reverse with the GBP-EUR exchange rate projected to decline by 0.5% in 2022-23, with forecast £1 to average €1.1702. This is because in September 2022, Chancellor of the Exchequer, Kwasi Kwarteng, announced the UK government's mini-budget outlining plans for an array of tax cuts in order to try and reinvigorate the UK's stalling economy and attempt to counter the increasing inflation. However, this would have been funded by the borrowing on billions of pounds. Hence, the market reacted negatively towards this and the pound depreciated against the euro. In response to the misguided government initiatives, the Chancellor and Prime Minister have since been replaced, with the pound appreciating slightly against the euro. Nonetheless, at the time of publication, the BoE daily spot exchange rate was £1 equal to €1.1574 on 29 November 2022.