Pound Sterling seen advancing on the US Dollar
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The pound has performed well this week, which could be due to the local elections and the euro’s weakness. It remains above the 1.16 handle against the euro this morning.
Thanks to local elections, the pound had its best day since December on Monday, May 10.
Since then, sterling continued to increase, benefitting on Wednesday from “a touch of EUR weakness”, according to Michael Brown, currency expert at Caxton FX.
Although trading at a slightly lower rate than yesterday, the pound still remains above the 1.16 mark today.
It is trading at a rate of 1.1612 against the euro at the time of writing, according to Bloomberg.
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At the same time yesterday morning, sterling was trading at a rate of 1.1618 against the euro.
This means that that sterling has not moved much in recent days, but has decreased since Wednesday when it was trading at a rate of 1.1651.
Experts have predicted that there is not much in store for the pound today as the financial calendar is set to be quiet.
Mr Brown commented: “Sterling traded largely unchanged against the euro yesterday, continuing to trade just north of the 1.16 handle, as a stalemate between the bulls and the bears continues to play out.
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“This stalemate looks set to continue as the week draws to a close, with a quiet data calendar due, and liquidity in Europe set to remain fairly thin after yesterday’s public holidays,” Mr Brown added.
George Vessey, UK currency strategist at Western Union Business Solutions, also gave his insight on the pound to euro currency exchange rate this week.
He suggested sterling’s latest growth could be due to positive news about the UK economy as the nation emerges from its third lockdown.
He said: “UK GDP shrank by 1.5 percent in the first quarter of this year, ending a two-quarter period of growth but coming in slightly stronger than originally forecast.
“Britain’s locked-down economy caused household spending to collapse and school closures and a large fall in retail sales earlier in the quarter also weighed on output.
“Nevertheless, the impact on the economy was much smaller than during the first lockdown when GDP plummeted by nearly 20 percent. Furthermore, the gradual easing of lockdown measures meant GDP rose 2.1 percent in March following a revised 0.7 percent increase in February.
“Economic momentum is clearly building as companies step up investment and households look to unleash record amounts of savings accumulated during the pandemic.”
Mr Vessey continued: “The UK’s positive growth rate differential has arguably been priced into sterling’s value, but if the Bank of England start to scale back its bond-buying programme or hint a raising interest rates sooner than expected, then this should drive sterling to fresh 2021 highs.”
So what does all this mean for your travel money?
Although foreign travel is currently banned in Britain, Transport secretary Grant Shapps confirmed on Friday people in England will be able to travel to 12 named countries from May 17.
These countries are on the UK’s travel green list and are Portugal (including the Azores and Madeira), Israel and Jerusalem, Gibraltar, Iceland, Singapore, Australia, Brunei Darussalam, Falkland Islands, Faroe Islands, New Zealand, Saint Helena, Ascension and Tristan da Cunha, and South Georgia and the South Sandwich Islands.
With May 17 just around the corner, swapping travel money may be tempting at this time, but experts have warned not to do so until Britons are absolutely certain their holiday plans will go ahead.
It is crucial to keep an eye on the latest travel restrictions both in the UK and in the holiday destination, as they can change at short notice.
James Lynn, CEO and co-founder of Currensea commented: “While it’s excellent news international travel is opening up, the proposed traffic light system will mean there will still be an element of disruption this summer, both to travel companies and consumers.
“Extra caution and careful planning will be really important when it comes to planning holidays this year – and keeping abreast of the latest updates will be key.”
Mr Lynn added: “Financial safety when travelling must also be top of mind for consumers. Sudden changes and cancellations, which remain likely could put travellers at risk if the right precautions aren’t taken.”
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