The pound to euro exchange rate managed to make gains yesterday for the first time in four trading days. Yesterday’s improvement comes as the euro was weakened by below-forecast inflation figures. Disappointing construction PMI also did not prevent GBP’s amelioration on Tuesday. More data is out today, however, with experts predicting any pound rallies will be “short-lived.”
The pound is currently trading at €1.129 against the euro, 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 recorded its first daily gain in four trading days since last Wednesday against the single currency yesterday, as the pound benefitted from a broadly weaker euro,” said Brown.
“The euro lost ground after below-forecast inflation figures, a data point which will likely provide the European Central Bank (ECB) with a further headache ahead of Thursday’s monetary policy decision.”
Tomorrow will see the ECB announce its latest interest rate decision, leaving euro traders cautious while worries are rising that the eurozone economy is weakening.
Erik Nielsen, Chief Economist at the Italian lender UniCredit, sounded a note of warning, saying: “With substantial risks to the economic outlook and markets… sending inflation expectations scarily low, bold monetary action is needed.”
Brown continued: “The pound’s gains yesterday came despite construction PMI dipping into contractionary territory for the third time in four months in addition to continued domestic political uncertainty.
“Today, focus will fall on this morning’s services PMI release, with markets expecting the data to show the sector hovering just above contraction.
“However, after contraction in both the manufacturing and construction sectors, risks are biased to the downside.
“Should the data surprise to the upside, with a faster pace of expansion than expected, any sterling rallies will likely be relatively short-lived, with political uncertainties keeping a lid on significant appreciation.”
So how will this affect travellers buying holiday money? The Post Office is currently offering an exchange rate of €1.1008 for over £400 and €1.1059 for over £1,000.
Currency experts have cautioned that the release of new €100 and €200 euro notes – which complete the Europa monetary set – may well see holidaymakers facing issues.
Peter Rudin-Burgess from CompareHolidayMoney.com said: “If consumers find a €200 note in their wallet this summer, it is best for them to spend whilst in Europe to avoid being charged a premium for exchanging them back to pounds in the UK.”
Rudin-Burgess added: “We recommend to always check in advance to confirm whether larger notes will be accepted.”
The Post Office’s latest Holiday Money Index revealed in April that the pound was shown to have held its value in the face of economic uncertainty sparked by Brexit.
Turkey is currently a cheap holiday option for Britons thanks to the favourable exchange rate. Sterling’s biggest year-on-year gain of 34.3 per cent has been against the Turkish lira, giving holidaymakers £128 extra on a £500 currency purchase.
According to The Thomas Cook Holiday Report, Turkey has seen a whopping 27 per cent uplift in bookings compared to 2018.
Bali and Tokyo are among the 10 best value destinations in the 2019 Post Office Worldwide Holiday Costs Barometer.
