The pound to euro exchange rate plummeted against the euro at the end of last week. The fall came after the details of the government’s post-Brexit negotiation plan was revealed. Meanwhile, the euro made gains following reports of the German fiscal stimulus on Thursday.
Looking ahead at the week, UK-EU trade talks are set to take place as “politics comes back to the fore,” said experts.
Prime Minister Boris Johnson is to restart talks with EU leaders in a bid to establish viable trade deals with member countries.
If the results of these talks are anything like the lead up to the UK’s departure, strong deals are likely to boost the pound, whereas breaking ties could see the pound fall.
The pound is currently trading at 1.1588 against the euro, according to Bloomberg at the time of writing.
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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 declined to three-month lows against the euro on Friday, as the common currency remained well-bid on the continued unwind of carry trades,” said Brown.
“This week, politics comes back to the fore, with interiors set to closely monitor the initial round of UK-EU trade talks for any signs of progress.”
Coronavirus has also served to impact sterling’s performance.
Jeremy Thomson-Cook, Chief Economist at Equals (formerly known as FairFX), said: “The global emergency of coronavirus and its knock on impact for trade raises questions over the impact on currency for both consumers looking towards spring and summer trips abroad and businesses trading oversees.
“The euro remains the most vulnerable currency given its trade links with China and the sheer weight of disruption that will hit supply chains in the coming weeks and months, already evidenced in its fall of 2 percent against the US dollar since 31 December 2019.
“The pound looks relatively insulated for now given its reliance on the services sector as opposed to manufacturing, where production and supply are already being impacted as a result of the virus.
“The fact that we haven’t seen many infections here in the UK compared to other countries means fears and concerns over the economic impact of the virus are predominantly focused elsewhere.”
Thomson-Cook continued: “Although the coronavirus might not be cause for immediate concern when it comes to the strength of the pound, the unprecedented Brexit journey and trade negotiations will continue to cause fluctuations for currency.
“The EU General Affairs Council has now agreed a mandate for trade negotiations with the UK, and discussions are set to start next week.
“The outcome is likely to have a big impact on the strength of the pound, which has seen some gains since the UK left the EU at the end of January.
“There is a huge opportunity for the pound to gain strength over the course of the transition period, although much work is needed for it to return to its pre-referendum heights which it has yet to return to.
“The markets will be keeping a very close eye on the pound’s reaction to any talks and agreements.”
So, what does all this mean for Britons heading off abroad and looking to buy holiday money?
The Post Office is currently offering €1.1179 for £400 or more, €1.1343 for £500 or more, or €1.1401 for £1,000 or more.
Published at Mon, 02 Mar 2020 07:45:00 +0000