Hello MattyD,
Thank you for your question about background images. This can be adjusted in the Customizer under the Background heading.
The settings for Background Image Size are the ones to focus on in this case. I recommend choosing “Do not resize.” This should take care of the magnified pixel effect. Alternatively you could choose “Full height” or “Full width” to try a different look and still minimize the resizing effects that distort the image.
Best,
Christopher M.