The pound to euro exchange rate soared yesterday, rallying to a “year-to-date high.” The improvement came as Chancellor of the Exchequer Sajid Javid said the UK could secure a comprehensive EU trade deal this year. Javid commented: “There is a strong belief on both sides that it can be done. Both sides recognise that it’s a tight timetable, a lot needs to be done.”
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“It can be done. And it can be done for both goods where we want to see zero tariffs and zero quotas, and also services.”
The pound also strengthened following yesterday’s release of December’s public sector net borrowing report.
It revealed the government had borrowed less than expected ahead of the spending boost predicted for the Chancellor’s March Budget.
Andrew Wishart, a UK Economist at Capital Ecomonics, said: “We suspect [Javid] will increase investment by about £10bn a year – 0.5 [percent] of GDP.”
“That would provide a substantial and much-needed boost to economic activity.”
Looking ahead at today, there are no major releases due out today so sterling is unlikely to show much movement until Friday.
As for tomorrow, the pound to euro exchange rate could hold on to its gains if the European Central Bank is dovish in its statement following its first interest rate decision of 2020.
The pound is currently trading at 1.1844 against the euro, according to Bloomberg at the time of writing.
Michael Brown, currency expert at international payments and foreign exchange firm Caxton FX, spoke to Express.co.uk regarding the latest exchange rate figures.
“Sterling rallied to a year-to-date high against the common currency yesterday,” said Brown.
“Markets grew more doubtful about a BoE rate cut at the end of the month after the CBI’s quarterly business optimism rose to a near six-year high in January.
“Nonetheless, markets continue to await Friday’s PMI surveys, which will be the final data release before the BoE decision.
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“Today’s UK calendar is bare, however markets will pay close attention to the latest ECB decision.
“However, with policy set to remain unchanged, it shouldn’t be a market-mover.”
So what does this mean for Britons heading off on their holidays and buying travel money?
The Post Office is currently offering a rate of €1.1353 for over £400 and €1.1577 for over £1,000.
Rob Stross, CMO of peer-to-peer currency exchange platform WeSwap, shared his advice on the best way to buy holiday money.
He said: “When it comes to travel money, with the peaks and troughs of the pound in light of Brexit, it’s difficult to plan when to buy your travel money.”
Stross added: “We’ve also done research that shows nearly half of Brits buy all their travel money in one sitting.”
“It can be wise, however, to exchange half your holiday money now and half closer to when you go or if the pound strengthens.”
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