EU recovery to be ‘six months behind’ world economy says expert
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The pound to euro exchange rate has plummeted from what was described as a “13-week high” at the end of March, to new “six-week lows” in recent days. It comes amid growing concerns over the vaccination roll-out in Europe, coupled with “lacklustre” economic developments.
There is some good news for sterling, though, which remains steady and “supported” around the 1.15 mark.
At the time of writing, the pound is currently trading at a rate of 1.1505 according to Bloomberg.
Michael Brown, currency expert at Caxton FX shared his exclusive insight into the exchange rate with Express.co.uk.
He explained: “Sterling-euro did nothing of significance yesterday, besides confirming that strong support and dip demand continues to exist around the 1.15 handle.
“Lacklustre trade was likely a result of a lack of any notable economic releases.
“The calendar is again quiet today, meaning that another rangebound day may lie ahead.”
George Vessy, UK currency strategist at Western Business Solutions pointed out that, despite the recent drop, sterling is still sitting in a more favourable position thanks to the reopening of the UK economy.
“GBP is riding higher on the optimism surrounding the ‘stage two’ of lifting lockdown that began on Monday,” he said.
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“On the economic data front, the UK Gross Domestic Product (GDP) rose by 0.4 percent in February, missing the market consensus of 0.6 percent.
“However, investors shrugged off the downbeat data and remain optimistic about future growth as the restrictions being eased would result in the pick-up of economic activities in the coming months.”
There are concerns about the impact a major change at the Bank of England could have on the pound in the coming months.
Mr Vessey explained: “The pound was under pressure following the announcement that the Bank of England’s (BoE) chief economist, Andy Haldane, will be leaving the central bank later this year after the June monetary policy committee (MPC) meeting.
“Haldane is known as one of the more bullish members of the nine-person MPC, which sets UK interest rates.
“Haldane previously likened the UK economy to a ‘coiled spring ready to go off once restrictions are lifted’.
“For sterling, given Haldane’s hawkish stance, his resignation offers only downside potential.”
So what does this mean for Britons looking to exchange travel money in the coming months?
While hopes are pinned on May 17 as the date some international travel will resume, this will not be confirmed unless the Global Travel Taskforce deems it “safe” at the time.
Therefore, one travel money expert has warned off switching money before anything is confirmed.
“Many people buy their holiday cash at a time when the rate is favourable even if that is months ahead of their actual trip,” said Paul Brewer, CEO of Currency Online Group.
“In normal times, this is very sensible as it locks in a good rate meaning they get more for their money.
“However, with unexpected changes in the quarantine rules week by week and with so much other uncertainty, this can leave you stuck with thousands of pounds worth of currency you can’t use.”
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