The pound to euro exchange rate has continued to rise since it was announced that Boris Johnson would be entering No. 10 as the new Prime Minister. Sterling’s increase comes despite initial predictions that GBP could fall if Boris came to power. The “lack of volatility” has since been attributed to markets being well-prepared for Johnson beating Conservative rival Jeremy Hunt. Looking ahead at today, the focus will be on the European Central Bank’s latest monetary policy decision.
Should there be a dovish message from the ECB, the euro could be weakened by the decision, experts have said.
The pound is currently trading at 1.121 against the euro this morning, according to Bloomberg at the time of writing.
Michael Brown, currency expert at Caxton FX, spoke to Express.co.uk regarding the latest exchange rate figures.
“Sterling firmed against the euro on Wednesday, adding around 0.5 per cent as the common currency weakened,” said Brown.
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“This came after poorer than expected PMI figures raised further concerns over weak economic momentum across the bloc.”
“Turning to today, all eyes will be on the ECB’s latest monetary policy decision.
“Interest rates are likely to remain unchanged, however, policymakers are likely to alter their forward guidance to indicate rate cuts on the horizon.
“However, there is a real risk of Draghi looking to ‘out-dove’ the market by announcing a surprise 10bps rate cut, should policymakers see little reason to wait before providing additional stimulus. A dovish message from the ECB should weaken the euro.”
So what does this all mean for British tourists heading off on their summer holidays?
The Post Office is currently offering a rate of €1.0912 for over £400 and €1.0976 for over £1000.
If holidaymakers are unsure about pound volatility and want to hedge their bets, Brown advises travellers to “protect themselves from the on-going currency volatility against the Pound by exchanging half their currency now, half later.
“That way, whether the rate goes up or down, they can benefit from a higher exchange rate on at least half the amount,” he said.
Johnson has been an ardent Brexiteer and supports a no-deal Brexit so what does BoJo as Prime Minister mean for your holidays come 31 October?
If a no deal Brexit goes ahead while you’re on holiday or before then a travel insurance policy is not guaranteed to cover you, Fiona Macrae from travelinsuranceexplained.co.uk said.
“Most travel insurance policies will only cover you to claim for specific causes listed in the policy document,” she explained.
“If the cause you are claiming for, such as Brexit, isn’t listed then you won’t be able to claim.”
To best protect yourselves the insurance expert advises looking for a policy that will offer you cancellation and delayed travel cover for anything ‘which you could not have been expected to foresee or avoid’ or anything ‘beyond your reasonable control.’