Although today is a busy day within the financial calendar, an expert warned that this does not mean that investors should expect “significant volatility” from the exchange rate.
However, George Vessey, UK Currency Strategist at Western Union Business Solutions, said yesterday that the pound could increase in the coming days.
He commented: “The British Pound could rally higher this week if the Bank of England signals it is ready to start reducing its bond buying programme at its monetary policy announcement tomorrow.
“The central bank will also provide updated growth and inflation forecasts – both of which are expected to be revised higher, which again could support GBP demand.”
But Mr Vessey warned that today’s local elections could impact negatively on the pound if there is clear support for Scottish independence.
He said yesterday: “The Scottish Parliament election also takes place tomorrow though, which may limit sterling’s potential upside in the short term if pro-independence parties gain a substantial majority.
“Back in 2014, when the last Scottish independence referendum took place, sterling slumped around six cents in the month of the vote, but in the build-up prior – the political risk was largely ignored. For this reason, upside risks might indeed outweigh downside risks in the short term for the pound.”
So, what does all this mean for travel money?
Foreign travel is currently off the cards for Britons, but the ban is set to be lifted from 17 May, with some countries expected to reopen their borders to tourists.
Britons could be permitted to travel to countries on the UK’s green list, which could include European nations such as Portugal, Greece, and Malta.
However, some experts have warned against swapping travel money at this time.
James Lynn, co-CEO and co-founder of Currensea, said: “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.
“Once we are allowed to travel again, this will hopefully signify the end of the COVID bump and I anticipate this will mean the pound will improve significantly.”
