The pound to euro exchange rate slipped on Thursday as the trading week drew to a close. It fell dramatically following the Bank of England’s “increased speculation about negative rates,” said experts. However, GBP managed to make a recovery after the prospect of a Brexit trade deal looked more likely.
“It slipped almost a big figure from the highs after the BoE further increased speculation about negative rates, before recovering most of the lost ground after EU Commission President von der Leyen was said to be ‘convinced’ that a UK-EU trade deal can be agreed.
“Looking ahead, those Brexit headlines are likely to remain the primary factor driving the pound into the weekend.
“Though any downside for sterling may now be amplified as a result of sub-zero rate pricing.”
George Vessey, Currency Strategist at Western Union, also commented on the Brexit and the exchange rate.
“GBP/USD remains highly volatile but is on track to close the week on a positive note up just over 1.5 percent from Monday.
“Health experts are reportedly suggesting putting the UK back into a second national lockdown as cases continue rising.
“The pound fell sharply on Thursday after the Bank of England said it had briefed monetary policymakers on how a negative interest rate could be brought in, before recovering most of the lost ground in later trading.
“The Bank of England (BOE) kept its main stimulus programmes on hold as expected, and said that Britain’s economy had performed better than anticipated. Highlighting risks relating to rising COVID-19 cases, the unwinding of jobs protection schemes and Brexit, the BOE said it stood ready to take further action.
“Brexit talks were thrown into disarray by Prime Minister Boris Johnson proposing legislation that would break international law by breaching parts of the Withdrawal Agreement relating to Northern Ireland – the bill is moving through parliament this week. U.S. Democratic presidential candidate Joe Biden warned the UK that it must honour its commitments to Northern Ireland, or there would be no post-Brexit trade deal between the UK and United States.
“UK Retail Sales beat estimates with +0.8 percent over the month in August vs. +0.7 percent expected and +3.6 percent previous. The core retail sales, stripping the auto motor fuel sales, stood at +0.6 percent MoM vs. +0.4 percent expected and +2.0 percent.”
So what does this all mean for your holidays and travel money?
The Post Office is currently offering a rate of €1.0531 for over £400, €1.0685 for over £500 or €1.0740 for over £1,000.
Travellers should always look to monitor the exchange rate and buy when the rate if favourable or they risk losing money.