The pound plummeted to its lowest level against the euro since August as concerns over a “no-deal” Brexit continue to rise. The UK is due to end its negotiations with the EU on October 31, meaning clarity over a deal needs to be hammered out by the end of the month.
Today, the UK government is set to push ahead with publishing its “controversial” Internal Market Bill.
Traders will be watching the response of EU leaders to determine how the exchange rate will change in the coming hours.
The pound is currently trading at a rate of 1.1008 against the euro at the time of writing.
Speaking exclusively to Express.co.uk currency expert Michael Brown from Caxton FX shared his insight.
“Sterling fell to its lowest levels since 20th August against the euro yesterday, moving back below the 1.11 handle as no-trade-deal Brexit jitters continued to put downward pressure on the pound, coupled with a broader soft risk tone,” he said.
“Those aforementioned Brexit concerns will remain front and centre today, with the government set to publish the somewhat controversial ‘Internal Market Bill’, the EU reaction to which will determine what happens next in the talks.”
The Internal Market Bill is set to transfer powers to regulate issues previously held by the EU – such as food standards and environmental policy – to the administrations of the four U.K. nations.
It will also ensure standards remain the same across England, Scotland, Wales and Northern Ireland after the EU departure on December 31.
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George Vessey, UK currency strategist, Western Union Business Solutions says jitters have resulted in a “weakened” pound.
“The British Pound has fallen over 2.5 percent since hitting a 2020 high last week against the US Dollar,” he said.
“The pound has weakened against all its major peers in fact as worries about a no-trade deal Brexit heat up. The eighth round of UK-EU trade talks begins today and sterling appears vulnerable.
“The EU told the UK yesterday that if the Brexit divorce treaty, that was signed in January, was tampered with, then a deal would be off the table.
“The UK government was reported to be planning new legislation to override parts of the Withdrawal Agreement that could jeopardise the whole treaty.
“The situation has intensified and is raising the prospect of a turbulent end to the 4-year Brexit saga.
“Both sides agree that a deal needs to be made before the end of October to allow time for ratification before the end of a status-quo transition period, which expires on Dec 31.
“Even if this is just posturing from the UK, the perceived probability of a no-deal scenario will likely increase and weigh heavily on sterling.”
However, he pointed out that there could be some hope to help sterling gain strength before the year is out.
“In the past, no deal fears have dragged GBP/EUR well under the €1.10 handle,” he said.
“But if a free trade deal is agreed, even a ‘thin’ agreement, then sterling should remain supported and climb higher before year-end.”
So what does this all mean for Britons looking to exchange travel money in the coming weeks?
The likelihood is that more turbulence is ahead for the exchange rate, depending on what government decisions are made.
With that in mind, travellers need to be up-to-date on relevant developments that could impact the rates at which they buy their currency.
The good news is, with so many travel money providers now open for business since lockdown, there are opportunities to shop around and compare rates.
Britons can also lock in rates by purchasing a pre-paid travel money card.
Travel money cards can be used abroad in the same way debit or credit cards can be but without the risk of extra charges.
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“This year’s consumer research revealed a big increase in the percentage of people who got caught out by charges for paying on plastic,” said Nick Boden, Head of Post Office Travel Money.
“Paying by debit or credit card may be convenient but holidaymakers are likely to incur fees and transaction charges without realising it until they see their bank statements.
“A safer route is to use a prepaid card like the Post Office Travel Money Card, which can be loaded with cash and won’t incur extra charges in shops and restaurants.”
The Post Office is currently offering a rate of 1.0652 for £400 or more, and a rate of 1.0863 for £1,000 or more.
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