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The UK and EU are currently locked in trade deal negotiations as the December deadline approaches. Both parties have hit sticking points which include fishing rights and competition rules. Yesterday, negotiations took a pause after a member of the EU side tested positive for coronavirus.
This week, Brexit has largely driven the pound, with the currency rallying with any hint of news regarding a trade deal.
The pound to euro exchange rate will likely continue to be driven by Brexit developments “until a deal is done”, according to experts.
Today, the pound is currently trading at 1.1181 against the euro, according to Bloomberg at the time of writing.
This is above yesterday’s rate of 1.1175.
Michael Brown, currency expert at Caxton FX, an international payments and foreign exchange firm, spoke to Express.co.uk about the latest figures this morning.
He said: “Sterling failed to break above its recent highs near €1.12 yesterday, instead enduring another rather rangebound session awaiting fresh news on Brexit.
“The same theme is likely to prevail today, and until a deal is done.”
George Vessey, a UK Currency Strategist at Western Union Business Solutions commented on the latest exchange rate developments.
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Mr Vessey said Brexit and the news of successful vaccine trials has led to GBP seeing some gains.
He explained: “A combination of positive Brexit news, inflation data and the optimistic vaccine developments of late helped the British Pound extend recent gains yesterday, but concerns about surging coronavirus cases globally have capped pound traders’ enthusiasm.
“Sterling was upbeat this week, and a Bank of England policymaker interpreted markets as pricing in just a 20 percent chance of a no-deal Brexit.
“The recent positive vaccine news also drove demand for riskier assets, which tends to include the politically-charged pound.
“Helped by prevailing US Dollar weakness, GBP/USD climbed above $1.33 for only the eighth time this year.
“A week ago, the currency pair retraced to $1.31 after failing to maintain above this key resistance level and the already the $1.32 mark has nearly been challenged this morning.”
The UK economy has been hit hard by the pandemic, with reports claiming that the government’s forthcoming Spending Review will show that the economy contracted by almost 11 percent this year.
Mr Vessey said that a Brexit deal and a vaccine being rolled out could help it recover.
He added: “The UK economy has suffered greatly because of the pandemic, but a Brexit deal and an effective vaccine roll out should support recovery hopes and favour GBP upside.
“GBP/USD is carving out a significant monthly rise, which could act as a springboard for further gains into December.”
So what does all this mean for travel money?
Post Office Travel Money is currently offering a rate of €1.0770 for over £400.
For a spend of £500 or more, today’s online rate currently stands at €1.0926 and a spend of £1000 or more will get you a rate of €1.0982.
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