The pound has this morning jumped to €1.138 after dipping to lows of €1.128 at the start of the week.
Sterling has been delivered an encouraging boost by UK inflation data released yesterday.
Cost of living came in at 2.9 per cent for May, the highest level seen since June 2013.
The figures were released by the Office for National Statistics (ONS) and measured by the Consumer Prices Index (CPI).
Pound euro exchange rate – sterling has climbed back amid soaring inflation
The pound recovered from the week’s worst levels against the euro despite fresh concerns for UK consumer spending
Recreation costs, particularly for games and toys, as well as food and electricity saw the biggest price rises.
TorFX currency analyst Laura Parsons said: “The pound recovered from the week’s worst levels against the euro despite fresh concerns for UK consumer spending.
“Domestic inflation rose to 2.9 per cent in May.
“Given that wage growth remains tepid, this could spell trouble for the UK’s dominant services sector in the months ahead.
Pound euro exchange rate – sterling is buying €1.14
“However, spiking inflation is likely to deter the Bank of England (BOE) from introducing further easing so the CPI report actually helped sterling recover a little ground against rivals like the euro and US dollar.”
Inflation is now well above the Bank of England’s target of two per cent, and rising much faster than wages, meaning Britons are seeing their real income fall and their budgets squeezed.
The pound has also been bolstered against the euro amid hopes of a successful deal between the Conservatives and the DUP (Democratic Unionist Party).
DUP leader Arlene Foster said her party will “support the national interest” as she prepared to meet the Prime Minister.
Pound euro exchange rate – inflation levels have soared to their highest in four years
Afterwards the DUP leader tweeted: “Discussions are going well with the government and we hope soon to be able to bring this work to a successful conclusion.”
The exchange rate has been suffering since the hung parliament General Election result was revealed on Friday.
Sterling took a sharp downward turn and some airports have been offering below parity rates in the fallout.
Experts have warned there could be more trouble ahead for the UK currency pending negotiations on Brexit.