The exchange rate has climbed to €1.136, up from €.127 yesterday.
Sterling was boosted yesterday by retail sales data released out of the UK.
According to data published by the Office for National Statistics (ONS), retail sales growth in the UK surged from 0.6 per cent to one per cent in August, reaching its highest levels since April and beating expectations it would slide to 0.2 per cent.
A strong uptick in clothing sales in particular appeared to drive the rise in sales last month, with increased demand for non-essential items helping to offset subdued food and fuel sales.
Pound euro exchange rate: Sterling has been boosted ahead of a Eurozone update
The ONS said in its report: “Year-on-year contribution of food stores remains flat, while there was a fall in the contribution of growth within petrol stations, showing that contributions to the overall growth came from non-essential items.”
It wasn’t the only factor to boost the exchange rate. The euro was weakened ahead of an announcement from the Federal Reserve.
TorFX currency analyst Rewan Tremethick said: “Data showing strong growth for UK retail sales in August proved a nice surprise for markets yesterday.
“Sales grew one per cent on the month, against predictions of a 0.2 per cent expansion.
Pound euro exchange rate: Sterling is buying €1.136
GBP/EUR won’t get much of a rest ahead of Theresa May’s Brexit speech
“This pushed GBP/EUR up 0.3 per cent to €1.130, with the euro also weakened by market anticipation of the Federal Reserve announcements in the evening.”
Fresh data out of the UK today could stand to further influence the exchange rate.
An update from the Eurozone is also on the agenda.
Mr Tremethick said: “UK government borrowing figures and a speech from European Central Bank (ECB) President Mario Draghi this afternoon will ensure that GBP/EUR doesn’t get much of a rest ahead of Theresa May’s Brexit speech on Friday.”
Pound euro exchange rate: Sterling remains vulnerable to a speech from Theresa May on Brexit
Prime Minister Theresa May is due to fly to Florence this week to discuss her vision for a post-Brexit Britain and the future ties with Europe.
British officials said it is likely that Mrs May has already told her cabinet of the details of her Florence speech.
The looming Brexit update has prompted speculation Boris Johnson may quit if it does not go the way he wants.
But Mr Johnson has vehemently denied these claims. He told the Guardian: “I am mystified by all this stuff. Not me, guv. I don’t know where it is coming from, honestly.”