Brits stockpiling euros ahead of Brexit
Travellers fear crashing out with no deal could cause the pound to tank
Britons appear to be stockpiling euros ahead of the UK’s departure from the EU, amid fears a no-deal Brexit could cause sterling to plummet.
Post Office Travel Money, which handles a quarter of all UK foreign exchange transactions, said sales of euros were up between 3-5% on the previous year for November, December and January.
“While the numbers show British appetites for holidays on the continent have not been diminished by Brexit,” The Independent says “they could also illustrate fears the pound could slump if the UK crashes out without a deal on 29 March”.
Sterling fell by more than 10% in the days following the 2016 EU referendum, and there is concern a similar slide could be precipitated in the event of a no-deal Brexit.
“With the pound serving as one of the main barometers for investor sentiment on Brexit and investors facing such the binary outcome of either a deal or a chaotic no-deal scenarios, markets are bracing for a large swing in both directions,” says Bloomberg.
While the odds still favour Theresa May getting a deal through Parliament “pound trader are losing faith” in the prime minister, says the business news site.
The Daily Express says “no experts can predict exactly what will happen to the British currency as Brexit quickly approaches, and it’s important to remember there are other factors that affect the pound’s value”.
Ian Strafford-Taylor, CEO of currency expert FairFX told the tabloid: “It’s possible that the pound will strengthen if the UK and EU can agree a divorce deal, but it all depends on the deal itself.”
“If the market feels the deal isn’t economically favourable to the UK, then we could even see the pound lose ground” he added.
Yet it is not all bad news for holidaymakers.
While the pound remains well below its pre-June 2016 levels against the euro, beyond the eurozone sterling has performed better.
According to Post Office Travel Money it has strengthened against almost half the best-selling currencies, including the Turkish Lire and Icelandic Krona.
By contrast, £500 in US dollars today buys almost £50 less than it did in spring last year.
Currency volatility can make medium-term planning tricky, but it could still impact where people choose to spend their holidays.
“Our research has shown that over two-thirds of holidaymakers bust their budget by nearly £100 on their last trip abroad,” says Post Office Travel Money expert Andrew Brown, so “choosing a destination where sterling is performing best and where the cost of meals, drinks and other tourist staples is low could help to prevent that.”