Pound to euro exchange rate drops after significant rise
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The pound to euro exchange rate enjoyed a period of successful growth over the last week thanks to the vaccine roll-out. However, in the last 24 hours sterling’s growth has come to an “uninspiring” halt.
Some experts are suggesting this may come as the result of new concerns arising over ‘the trade deal”.
The pound is currently trading at a rate of 1.1382 against the euro according to Bloomberg at the time of writing.
Though the UK GDP is expected this morning, Michael Brown, currency expert at Caxton FX predicts this will make little difference.
“Price action in GBPEUR has been, to be frank, rather uninspiring over the last 24 hours, owing to both the Lunar New Year holidays shutting many Asian centres, and the data calendar being incredibly sparsely populated,” he told Express.co.uk.
“UK GDP is, however, due this morning, though it is tough to see this being a major market mover, likely meaning that the pair largely treads water into the weekend.”
Meanwhile, George Vessey, UK currency strategist at Western Business Solutions has suggested “sour EU relations” could have further impact on the exchange rate.
“After securing a trade deal with the EU last year, the Brexit risk premium that had haunted the pound for years appeared to have faded,” he explained.
“However, that trade deal is already coming into question as the EU is seeking to postpone ratification.
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“UK negotiators have recently admitted that EU relations are sour, and this increasing uncertainty could start to weigh on sterling’s recent ascent.
“The latest tensions between the UK and EU shouldn’t come as a surprise given the sentiment about the Northern Ireland protocol.
“One EU official fired warning shots at the UK’s inability to respect Brexit terms over Northern Ireland. Given this negative news, the pound could trim some of its recent gains and give way to renewed political uncertainty.
“Already the market mood appears more cautious following the latest geo-political tensions between the US and China.”
So what does this mean for travel money?
As airlines and holiday firms announce further cancellations, many Britons may be left with unwanted foreign currency.
Though the national lockdown means many high street retailers remain closed, some travel money firms are operating online.
The Post Office Travel Money is one provider which is offering a “click and collect” service for those looking to exchange currency.
Post Office Travel is currently offering a rate of €1.1002 over £400, €1.1162 for over £500, or €1.1219 for amounts over £1,000.
However, James Lynn, co-CEO and co-founder of Currensea has suggested some would-be holidaymakers may want to hold off exchanging their money for now.
He Express.co.uk: “It may be tempting to change back leftover travel money, or even take out foreign currency in anticipation of a future holiday, while the exchange rate is favourable. However, I would advise against this.
“Market movements are often more marginal in reality than they appear.
“Especially during this volatile time, it’s safer to keep hold of your money in your UK bank account over purchasing or exchanging and holiday money.
“Once we are allowed to travel again, this will signify the end of the COVID bump and I anticipate this will mean the pound has improved even more significantly than the level it is at today.”
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