The pound to euro exchange rate displayed little volatility following the news of Boris Johnson’s accession to the role of Prime Minister yesterday morning. Experts initially predicted that the exchange rate would fall if Johnson became PM but the pound went on to soar. The “lack of volatility” has been attributed to markets being well-prepared for Boris Johnson beating Conservative rival Jeremy Hunt. The outcome had therefore “been priced into the pound” for the past month.
The pound to euro exchange rate will today focus on Johnson’s Brexit plan and his Cabinet appointments.
The pound is currently trading at 1.116 against the euro this morning, according to Bloomberg at the time of writing.
Michael Brown, currency expert at Caxton FX, spoke to Express.co.uk regarding the latest exchange rate figures.
“Sterling once again experienced a relatively quiet trading day on Tuesday, adding around 0.2 per cent against the common currency,” he said.
“The lack of volatility came despite the long-expected announcement of Boris Johnson as the next Conservative Party leader, and thus Prime Minister.
“The muted trading conditions can be put down to the outcome having been priced into the pound over the past four weeks or so, hence causing little immediate market reaction.
“Turning to the day ahead, focus for the pound will remain on political developments – namely Boris Johnson’s Cabinet appointments and clarity over the new Prime Minister’s Brexit plan.
“Meanwhile, from the eurozone, market participants will be closely watching the monthly PMI surveys for a gauge of economic activity ahead of Thursday’s ECB policy decision.”
Investors will be watching closely to see how many ministers unhappy with a Johnson government will resign today, as well as the make-up of his cabinet.
Two junior ministers have already quit over Johnson’s plans, and finance minister Philip Hammond and justice minister David Gauke have both said they plan to resign before they are sacked.
So how should holidaymakers looking to buy euros best proceed given the political climate?
Brown has advised: “With all this uncertainty, holidaymakers can hedge their bets and protect themselves from the on-going currency volatility against the Pound by exchanging half their currency now, half later.
“That way, whether the rate goes up or down, they can benefit from a higher exchange rate on at least half the amount.”
Alana Parsons, from international payments and foreign exchange firm Caxton, added: “Getting the most value for your travel money can be tricky, but not if we spend as much time planning our finances as we do researching our holiday destinations,” she said.
“There’s a lot of uncertainty right now because of Brexit and global events impacting the forex market. However, there are a number of ways travellers can protect themselves to get more foreign exchange for their pounds.
“Build up a travel money fund and lock in an exchange rate for your next trip on a currency card, keep a watchful eye on the rates so you can take advantage of any gains, and most importantly don’t leave it all to the last minute and avoid airport kiosks!”
