The pound continues to be impacted by Brexit developments as the date for the UK quitting the European Union without a deal in place fast approaches. Experts have cautioned that GBP is undergoing a “state of flux” as a result of the movements on the political stage. As it stands, unless Prime Minister Theresa May can organise an alternative arrangement with Brussels, the UK will leave the EU in a ‘hard Brexit’ scenario at 11pm on Friday, 12 April. However, it is likely that May will ask for another extension to avoid a no deal Brexit.
The pound is currently trading at €1.163 against the euro, according to Bloomberg at the time of writing.
Laura Parsons, currency analyst at TorFX, spoke to Express.co.uk regarding the latest exchange rate figures.
“With the UK’s deadline for exiting the EU fast approaching (once again) the pound has been left in a state of flux,” said Parsons.
“GBP/EUR is currently trading in the region of €1.163. At the moment it looks as though the UK will receive another extension to avoid crashing out without a deal on Friday.
“But there are no certainties at this stage and this week is likely to be another volatile one for GBP.”
Michael Brown, senior analyst at Caxton FX, added: “Sterling remains relatively well-supported ahead of another crunch week for Brexit, with focus falling on this Wednesday’s EU summit where leaders are expected to grant the UK a further extension to Article 50, possibly as long as 12 months.
“The granting of an extension may support the pound due to the avoidance of an imminent no-deal exit, however the deadlock in Westminster over the way forward is likely to cap any rallies unless cross-party talks are more fruitful this week.
“Other focuses for the week ahead include Wednesday’s ECB meeting, where no change to policy is expected, as well as the release of minutes from the Fed’s March policy meeting, where markets will be looking for further clarification of the reasoning behind the Fed’s dovish policy shift last month.”
The euro received a boost last week thanks to February’s German industrial production rising by a higher-than-forecast 0.7 per cent, helped by a pickup in construction.
In a statement, the German Economy Ministry said: “The industrial sector is expected to remain subdued given the weak development in orders and the gloomier business climate. The construction sector remains in a boom. The relatively mild weather contributed to the good result in February.”
This provided the Eurozone’s largest economy with a glimmer of hope following a slew of negative data last week.
Commenting on the data, ING economist Carsten Brzeski said: “A warm thank you to the construction sector. More generally speaking, German industry remains an international reason for concern. Brexit woes and the global slowdown have a stranglehold over German industry.”
So what should British holidaymakers do regarding travel money? Ian Strafford-Taylor, CEO of currency expert, FairFX said: “As we’ve said time and time again, uncertainty is one of the biggest causes of volatility for the pound, and with so little clarity over Brexit at the moment the pound is more vulnerable than ever.
“As families prepare for their Easter getaway, a question we’ve been asked a lot is when to buy holiday money.
“The best thing holidaymakers can do is keep an eye on how the pound reacts this week, and lock-in rates to a prepaid card when you’re happy with the rate on offer as this is the only way to safeguard yourself from further fluctuations.
“If you haven’t booked a holiday yet this year it’s worth considering destinations where the pound is performing well if you want to see your money go further. Looking at destinations outside of the eurozone could be the key to getting more for your money.”
Last week it was ruled that British tourists will not need a visa to go on holiday to countries in the EU after the European Parliament voted for visa-free travel for UK citizens today in the event of a no-deal Brexit.
They will be permitted to stay in the EU visa-free for up to 90 days in any 180-day period. The law is conditional on the UK providing the same right to EU citizens.
According to a statement released by the European Parliament: “The legislation will apply from the day following the UK’s withdrawal from the European Union.”
British tourists will become “third country nationals” when Brexit goes ahead – similar to citizens from Australia, Japan and the US.