The pound has broken the 1.24 Euro mark for the first time since the end of 2008.
The exchange rate is a result of the elections in France and Greece over the weekend that have 'spooked investors'.
The Greek conservative New Democracy party failed to form a Government yesterday, and uncertainty remains as runners up the Syriza party attempt to form a Government. If they fail, fresh elections are expected to take place as soon as next month.
Meanwhile, socialist leader Francois Hollande is to be France's new president after winning just under 52 per cent of the vote on Sunday.
Both election results swing towards growth strategies rather than the previous austerity plans, according to currency specialists at HiFX, and this has reignited caution in the markets as investors begin to question how this growth will be funded.
Commenting, Chris Towner, director of FX advisory services at HiFX said: "Growth is always going to be a vote winner and each of us can relate to this as spending is a lot easier than saving, but we also know that at some stage the breaks need to be put on. A compromise/hybrid solution is now expected to be concocted as Europe continues to fudge its way onwards.
"This has helped push up GBP/EUR to 1.2400 as the UK is seen on the right track in terms of its debt reduction plan. Sterling over the last 6 months has managed to strengthen from its undervalued position closer to neutrality which we see around the 1.27-1.28 level. However from there, questions will still be asked, why should the Euro be neutrally valued against Sterling?"
Date:8 May 2012
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