Pound faces mounting 'pressure' as Brexit and national lockdown concerns collide

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The pound to euro exchange rate faces mounting pressure amid the latest decision by UK Prime Minister Boris Johnson to launch England back into a nationwide coronavirus lockdown. Much like the draconian measures issued in March, it is likely the stop to anything akin to “normal” life for many Britons will have a major impact on the pound.

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With Brexit negotiations still ongoing, the hope of a deal being struck between UK and EU leaders could offer a light relief for the exchange rate.

The pound is currently trading at a rate of 1.1085 against the euro according to Bloomberg at the time of writing.

Speaking exclusively to Express.co.uk, Michael Brown, currency expert at Caxton FX, shared his insight into the current exchange rate.

“Sterling notched its second straight gain against the euro on Friday, though is set to be under pressure this morning after the announcement of a second England-wide national lockdown raises the chances of both a W-shaped recovery and more monetary stimulus from the BoE,” he said.

READ MORE: Lockdown travel ban: Holidays and flights refunds

Pound faces mounting 'pressure' as Brexit and national lockdown concerns collide

Pound to euro exchange rate: The pound faces ‘pressure’ against the euro (Image: DX)

Pound faces mounting 'pressure' as Brexit and national lockdown concerns collide

Pound to euro exchange rate: The exchange rate at the time of writing (Image: Getty Images)

“On a more positive note, however, there are reports of progress being made in the post-Brexit trade talks, particularly around the contentious subject of fishing.

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“Agreement of a deal, no matter the covid situation, would at least provide some temporary relief for the quid.”

EU and British Brexit negotiators will continue talks in Brussels from today until around mid-week, sources on both sides said on Sunday, suggesting both sides are still pushing to avoid a damaging breakdown in trade in less than nine weeks.

It is likely both sides will compromise on fisheries.

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EU Brexit negotiator Michel Barnier said on Friday that “much remains to be done” to seal a deal.

Focus remains on economic “fair play”, fishing rights and decisions over how to settle disputes in future.

Yet, even if the UK does manage to strike a deal, the threat of lockdown still poses a risk to the pound’s status.

What’s more, many Britons due to jet off on holiday in the coming weeks now face devastation after Boris Johnson put a ban on all international travel for one month.

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Pound faces mounting 'pressure' as Brexit and national lockdown concerns collide

Timeline to Brexit (Image: DX)

Holidaymakers looking to change back their travel money will now be at the mercy of buy-back rates.

Although it may take some shopping around to find the best rates, one expert warns that changing travel money back into pounds is vital.

“Since lockdown began, cancelled holidays have meant that people are currently sitting with hundreds, if not thousands, in unused and unwanted currency,” said Paul Brewer, CEO of Currency Online Group.

“Many people decide to keep it in anticipation of a future trip; however this is not sensible.”

This is particularly true at the moment when the future of international travel seems so uncertain.

“When people have holidays cancelled or they come back from a trip with some currency left over, they will often put it away in a draw and forget about it,” the expert continued.

“Sometimes they’ll think, ‘I’ll use it next time’ but you’d be surprised how many people just simply forget it’s there after a while.”

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Mr Brewer warned: “Even if you do plan to use it the future, the changing exchange rate means you could be losing out if the value of the currency falls dramatically.

“Political and unforeseen events like Brexit and COVID-19 mean that the value of a currency can change quickly.”

If you did not secure a buy-back rate at the time of purchase, the best way to get more bang for your buck is to shop around and compare rates on offer.


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