Chancellor Rishi Sunak’s Budget announcement on Wednesday had “practically no effect” on the pound to euro exchange rate, said Michael Brown, currency expert at Caxton FX. The pound was in the mid-1.15 range against the euro before Mr Sunak’s speech, and remained there afterwards.
Yesterday, Mr Brown commented on the exchange rate at the time, saying: “Sterling-euro remains stubbornly rangebound in the mid-1.15s, with yesterday’s Budget having had practically no effect on the pound, and the market still looking for fresh impetus to determine its next direction.
“Today’s calendar is unlikely to provide that, given the rather barren nature of European-specific events, meaning another rangebound day could lie ahead for the cross,” he added.
Mr Brown had also predicted on Wednesday that Rishi Sunak’s news may not change the sterling-euro rate.
He said: “One may assume that today’s Budget could be a market mover, and there is a possibility that it will be; however, past Budgets have never been a huge event for the FX space, and with so much appearing to have been leaked in advance, the majority of announcements are probably priced in already.”
Mr Brown explained that the “early part of the week” had “brought little for investors to get their teeth into”.
George Vessey, UK currency strategist at Western Union Business Solutions, also shared his insight on the sterling-euro exchange rate yesterday.
He said: “As expected, this was an expansive budget designed to support the UK economy as it prepares for a re-opening from lockdown.
“The Budget offered little in terms of big surprises and therefore had low material impact on the pound. However, in terms of business and market sentiment, the overall tone of the Budget was optimistic. The upgraded OBR growth forecasts for next year are quite striking – over seven percent growth would be the biggest in over 80 years. The unemployment rate peak was lowered, too – again a positive update which should add to the constructive outlook for the UK economy (and thus for GBP) during the next quarter and throughout 2021.”
What does this mean for your holidays and travel money?
The good news is that travel money providers are offering more favourable rates than before the rise in exchange rate.
Post Office Travel is today offering a rate of €1.1160 over £400, €1.1322 over £500, and €1.1380 over £1000.
However, with the UK still in its third national lockdown, Britons cannot yet travel abroad.
James Lynn, co-CEO and co-founder of travel card Currensea, advised against taking advantage of the current exchange rate.
He said: “Market movements are often more marginal in reality than they appear. Especially during this volatile time, it’s safer to keep hold of your money in your UK bank account than purchasing or exchanging for holiday money.”