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Euro hits strongest level in eight years against sterling

The diverging economic outlook for the UK and the eurozone has driven the single currency to its strongest level in eight years against sterling.

The euro has hit €1.0867 per pound on Wednesday on the back of a flurry of better than expected eurozone economic indicators, appreciating 0.2 per cent on the day to levels last seen in 2009.

The bloc’s economy is going from strength to strength, with economic activity picking up in August after a brief hiatus in July. The manufacturing sector has proved particularly strong according to figures published today. The rate of private sector expansion is running at around the best seen over the past six years.

The news comes after data showed German business activity rebounded strongly in July, with the manufacturing sector defying expectations of a fall.

The economic data have also pushed the euro stronger against the dollar, shedding recent losses to rise 0.2 per cent to $1.1782.

UK economic data has been resilient recently, with better than expected public finances and rising retail sales. However productivity is declining and the political uncertainty of Brexit is weighing on markets. Sterling has underperformed most other major currencies this year.