The pound to euro exchange rate plummeted to a four-month low on Monday. The drop came as the euro “surged” thanks to “growing expectations of eurozone fiscal stimulus,” said experts. Coronavirus also continues to affected GBP and the exchange rate.
Looking ahead at the week, UK-EU trade talks are set to take place as politics take centre stage.
Prime Minister Boris Johnson is restarting 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.
Markets will be closely monitoring this which could see the exchange rate shift.
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Pound euro exchange rate: “Sterling fell to a four-month low against the euro on Monday”
Pound euro exchange rate: The pound is currently trading at 1.1497 against the euro
The pound is currently trading at 1.1497 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.
“Sterling fell to a four-month low against the euro on Monday,” said Brown.
“The common currency continued its recent surge on growing expectations of eurozone fiscal stimulus, and a continued unwinding of previously held carry trade position.
“[Meanwhile] investors continued to monitor the coronavirus outbreak and the potential for a co-ordinated global policy response.
“Today, the aforementioned policy response will be in focus, while markets will also closely monitor ongoing UK-EU trade talks for any hints of progress.”
As for coronavirus’s impact on GBP, 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.
Pound euro exchange rate: Coronavirus also continues to affected GBP and the exchange rate
“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.”
So what does this mean for holidaymakers looking to buy travel money?
The Post Office is currently offering an exchange rate of €1.1056 for over £400 and €1.1276 for over £1,000.
International Money Expert Ian Stafford-Taylor of Equals advised: “The safest way to guarantee getting an exchange rate you’re happy with is to lock-in the rate on a prepaid card when the pound is doing well.
“It also means you avoid losing money when you return from your trip and have to change any leftover cash back into pounds if the exchange rate has worsened.”
He added: “If it’s on a prepaid card that’s fine, you can save it for future trips or switch to a different currency, but if that’s in cash, you’re left at the mercy of buy-back rates which are rarely favourable.”
What’s more, when you’re away on your holiday, always use local currency, advises FairFX.
“If you have the option of paying by card – or withdrawing cash – in pounds rather than the local currency, always say no.
“This allows the other party to decide the exchange rate, a process known as Dynamic Currency Conversion, and it’s unlikely the rate they decide on will be in your favour. ”