Travel traffic light system labelled 'nonsense' by radio caller
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The pound to euro exchange rate remains “quiet” after an unfortunate traffic light update for hopeful holidaymakers last week. With Portugal now axed from the green list, along with no new additions, the options for foreign jaunts are growing slim.
However, according to experts, traders are continuing to wait for the Government’s confirmation as to whether or not stage four of the UK’s “unlocking” of lockdown will occur.
Michael Brown, currency expert at Caxton FX, also believes the European Central Bank’s (ECB) latest decision, expected on Thursday, could spark some movement for the exchange rate.
The pound is currently trading at a rate of 1.1620 against the euro according to Bloomberg at the time of writing.
“Sterling-euro had a quiet end to last week and looks likely to have a quiet start to this week as well, with the data calendar barren once again, and tight trading ranges continuing to prevail,” explained Mr Brown.
“The market still lacks a narrative onto which it can latch, and may well be waiting for Thursday’s ECB decision before making a more decisive move.”
Last week, George Vessey, UK currency strategist at Western Business Solutions explained a sudden drop in the pound’s strength came as a result of traders growing cautious of a delay in the June 21 ‘Stage Four’ date.
He said: “The British pound fell from three-year peaks on Wednesday as traders took profit on the recent rally helped by the ongoing reopening efforts and the rapid pace of vaccinations.
“The pullback was largely expected as investors weighed the possibility of a delay to the final phase of the UK reopening.
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“As it stands, UK economic conditions have been improving vastly and the latest forecast from the OECD showed the UK economy is expected to expand 7.2 percent this year, which would make it the fastest growth in circa 80 years and the fastest among developed countries.”
For holidaymakers due to go abroad in the coming months, the changing exchange rates could cause confusion.
Last week, Secretary of State for Transport Grant Shapps confirmed the Government would not be adding any more countries to the UK’s green list for travel.
Furthermore, it made the decision to remove Portugal from the green list, sparking a flurry of desperate Britons fighting to get home before Tuesday’s quarantine rule comes into force.
The transport secretary defended the decision as a “safety-first” approach.
Mr Shapps told BBC News: “I want to be straight with people, it’s actually a difficult decision to make, but in the end, we’ve seen two things really which have caused concern.
“One is that the positivity rate has nearly doubled since the last review in Portugal, and the other is that there’s a Nepal mutation of the so-called Indian variants which has been detected.”
He added: “We just don’t know the potential for that to be a vaccine defeating mutation and simply don’t want to take the risk, as we come up to June 21.”
With so much uncertainty surrounding whether or not other popular holiday destinations will make the green list in future, experts have cited caution over exchanging travel money.
“It may be tempting for many to rush to book this year’s holiday and take out holiday money now in preparation,” said James Lynn, co-CEO and co-founder of Currensea.
“However, while it is tempting to take out foreign currency in anticipation of a holiday 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 than purchasing or exchanging for holiday money.”
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