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Brexit news: Experts issue exchange rate ‘risk’ warning amid grim reality of weak pound

Brexit’s impact on the pound to euro exchange rate is tangible – and terrifying – for some British holidaymakers. Last month saw the worst value of sterling since the Millennium, while GBP as a whole has failed to regain the heights reached prior to the 2016 Brexit referendum. The chaotic nature of the UK’s negotiations on leaving the EU – now set for October 31 – has seen the exchange rate rise on hopes of a Brexit deal. Tipping the other end of the scale, the pound has slumped when the prospect of a no deal Brexit – where the UK would leave the EU with no route on how to proceed – was touted, yet in either circumstance, a stark new warning over currency “risk” has come to light.

Paul Brewer, founder of Currency Online Group, has spoken exclusively to about the dangers of both keeping euros in stock, and exchanging them too late.

He also shone light on the sheer reality of the plummeting pound for holidaymakers in what might be grim, but essential, reading.

He said the “risk” over currency related to the Brexit departure date – which is not set in stone – and has already shifted from March.

He told “Brexit could happen before the October 31 deadline so waiting until then to exchange euros back to pounds risks leaving you out of pocket with a currency that is worth less than before the referendum.

You can always spread the risk by exchanging half now and half much nearer the time.

“You might not be able to get as maximum value as possible doing it this way, but you can sleep easy by knowing that you won’t have lost out heavily.”

He also advised: “If you’ve bought your currency and then the rate strengthens significantly before you go away you might be kicking yourself, especially if you have exchanged a significant amount.

The average person takes £1,000 worth of currency on holiday which before the referendum would have bought 1,270 euros.

“Now it would buy 1,120 euros – a difference of £150.

That is quite a healthy chunk of purchasing power that has gone missing.

“However, do not let any frustrations get in the way – hindsight can be a blessing and curse in this situation but do not let it rule your emotions.”

This week, finance experts warned any immediate gains for the pound against the euro would be short lived.

The pound is trading at 1.124 against the euro, according to Bloomberg, at the time of writing.

Michael Brown, currency expert at Caxton FX, spoke to about the dire currency situation – and the one thing that can change it.

He said: “Sterling recorded a second consecutive daily decline against the euro on Friday, losing 0.3 per cent to close out a fifth consecutive week of losses – the longest streak since December 2018.

“The pound’s fall came as the single currency continued to strengthen after a less-dovish than expected ECB meeting and benefitted from weaker than expected US labour market data.

“Turning to the week ahead, while markets may glance over April’s GDP and labour market figures, focus for the pound remains on political developments.

“The Conservative Party leadership race is now in full swing, with markets remaining attune to developments in the contest – particularly the chances of a no-deal advocate in Number 10.

“Any sterling strength should remain relatively short-lived, with rallies remaining capped by political concerns.”

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