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The pound hit a two-month low last week and has not recovered since. It has struggled to increase momentum, but it has now risen above the 1.16 mark against the euro.
Due to changes in both Britain and the EU regarding the coronavirus pandemic, the pound has had a poor week.
Currency experts have claimed that its weak performance could be due to the fact that France is now demanding quarantine from Britons visiting the country.
Revelations made by Dominic Cummings last week about the Government’s handling of the pandemic could also be to blame.
However, the pound’s rate has risen slightly today since yesterday morning.
Sterling is currently trading at a rate of 1.607 against the euro, according to Bloomberg at the time of writing.
This is higher than yesterday morning when the pound was trading at a rate of 1.1585.
Although this is positive news, it is not expected sterling will move much throughout the day.
Michael Brown, currency expert at Caxton FX, told Express.co.uk: “Unfortunately the low volatility and tight ranges with which we have become far too familiar of late persisted yesterday, with the cross continuing to chop just a handful of points either side of the 1.16 mark.
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“Today’s final PMI surveys are unlikely to bother market participants too much, meaning that another quiet day could lie ahead.”
Despite the Purchasing Managers Index surveys, which are economic indicators derived from monthly surveys of private sector companies, sterling is expected to have a similar day to yesterday.
Speaking yesterday, Mr Brown shared his insight once more: “Sterling saw some downside against the euro yesterday, breaking beneath the 1.16 handle once more, in what appeared to be a flow-driven move, rather than anything more fundamental.
“Today’s calendar is barren, hence it will be interesting to see whether or not the bears can maintain yesterday’s momentum.”
George Vessey, UK currency strategist at Western Business Solutions, also commented on the pound to euro exchange rate yesterday.
He blamed the pound’s poor performance on the euro’s rise in inflation, saying: “For the first time in two years, Eurozone inflation rose to two percent in May, surpassing the European Central Bank’s (ECB) target and complicating the central bank’s decision next week on whether to maintain its ultra-loose monetary policy.
“GBP/EUR slipped under €1.16 as a result.
“The increase in inflation is the hot topic driving market sentiment and is likely to fuel investors’ nervousness that central banks will scale back monetary stimulus sooner than expected.
“The jump in Eurozone inflation from 1.6 percent in April followed an even sharper acceleration of consumer price growth in the US, which recently hit 4.2 percent.
“In the UK, Bank of England Deputy Governor Dave Ramsden noted inflation worries are setting in as the central bank monitors Britain’s booming housing market.
“If inflation persists and isn’t transitory as expected, we could see enhanced currency volatility as traders bet on which central banks will tighten policy first.
“GBP/EUR is currently two cents below its 2021 high, but trading over two percent above its two-year average rate.”
So, what does all this mean for your travel money?
Although there are 12 countries on the UK’s green travel list, some travel money experts are still warning customers that “preparation is key” when it comes to exchanging money before going abroad.
James Andrews, senior personal finance editor at Money.co.uk, said: “Once there has been an official green light given on our planned summer trips, there are ways to ensure you can stretch your summer spending money as far as possible by sticking to the following tips.
“Do not exchange your money last minute at the airport, the rates are generally much less favourable than online or high-street alternatives, so preparation is key.
“If you find yourself acting on impulse, booking a last-minute break and needing to collect your euros upon your departure date, try to order them for collection in advance of your travel dates to take advantage of the best possible rates.
“For the best rates, take out a travel money card now. It doesn’t fully replace having currency in hand when you land, but once there you can use these at no cost for spending or withdrawing from a cash machine.”
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