The pound to euro exchange rate has rocketed despite the absence of "significant volatility drivers," said experts. The boost came after the common
The pound to euro exchange rate has rocketed despite the absence of “significant volatility drivers,” said experts. The boost came after the common currency slumped against the dollar. That said, a “catalyst” is still needed to “spark a definitive move” for sterling.
The pound is currently trading at 1.1145 against the euro, according to Bloomberg at the time of writing.
Michael Brown, currency expert at international payments and foreign exchange firm Caxton FX, spoke to Express.co.uk regarding the latest exchange rate figures this morning.
“Despite lacking significant volatility drivers, GBPEUR has managed to reclaim the 1.11 handle over the last 24 hours, benefitting from a slump in the euro’s value against the dollar,” said Brown.
“Still, the pair remains largely confined to its recent range, and continues to search for catalysts to spark a definitive move.”
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George Vessey, UK Currency Strategist, Western Union Business Solutions, shared his insight on the shaky start to 2021.
“Choppy currency markets yesterday highlighted the uncertain outlook for the year ahead as investors weigh up the race between the vaccine rollout and the spreading COVID-19 virus,” he said.
“Vaccines have illuminated the path to an economic recovery, which is why risk appetite remains upbeat and global stocks, commodities and emerging market currencies remain in high demand.
“However, the sense of optimism has been deflated by the discovery of more transmissible forms of coronavirus in the UK and South Africa, as well as the stuttering start to vaccination programmes in some advanced economies.
“The risk-on-risk-off mood across the financial market, as a result, may soon see implied and actual volatility pick up in the short-term as a result.”
He also commented on the euro under pressure.
“The Euro’s positive run lost momentum last week,” he said.
“The medium-term view on [EUR/USD] is still bullish, but a correction lower in the short-term looks possible.”
He continued: “Europe is battling an escalating pandemic, which has frozen economic activity to a large extent once again.
“Although optimism about recovery has supported the common currency over recent months, market jitters are starting to reappear.
“This week, speeches from the European Central Bank (ECB) President are due and the minutes from the ECB’s latest monetary policy meeting will be published on Thursday.
“If risk aversion starts to gain traction across financial markets this week, expect further Euro weakness against the safe-haven US Dollar.”
So what does all this mean for your holidays and travel money?
Post Office Travel is currently offering a rate of €1.0675 over £400, €1.083 for over £500, or €1.0886 for over £1,000.
However, with a third national lockdown underway and Britons banned from travel, it’s unlikely anyone will be buying holiday money at this time.
An expert has warned against exchanging any unused foreign currency that you may still need once travel resumes once again.
“If you have got hold of foreign currency in cash, I’d recommend keeping it in a drawer if you can afford to do so,” said James Lynn, co-CEO and co-founder of travel debit card Currensea.
“The exchange rate has already hit the pound badly because of the third lockdown and if you go on a holiday later in the year you’ll be hit again converting your money back into the currency you need.”
“This could mean you lose 10 to 20 percent of the value due to fees.”