Sterling gains a boost for exporters here
sterling strengthened yesterday to hit its strongest level against the euro in a month.
A stronger pound is good news for Irish exporters in the run-up to Christmas, particularly in the food and drink sector where the UK remains the dominant market for Irish products.
Sterling gained yesterday following data that shows the UK services sector grew at the fastest pace in 16 years in October.
The pound hit a monthly high of 83.95 pence to the euro and strengthened against the dollar yesterday, after the news.
Sterling has been supported in recent weeks by gains in UK house prices and the wider recovery of the British economy.
The country's National Institute of Economic and Social Research (NIESR) said it thinks the UK economy will grow faster than previously expected next year.
The NIESR is forecasting the UK economy to grow 1.4pc this year and 2pc in 2014.
As well as the benefit of selling to a busier market, Irish exports become more competitive as the euro weakens against sterling.
However, the UK is also Ireland's biggest supplier of traded goods and services.
It means there is a risk that input prices will rise for Irish industry if sterling continues to gain.
Some funds that had bet on sterling weakening have been forced to buy the currency to compensate.
Analysts are now anticipating a possible rise in UK interest rates sooner rather than later, which could further boost sterling.
The pound has gained 4.1pc in the past six months against a basket of currencies.
It is the most significant gain among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. (Additional reporting Bloomberg)