The pound has slumped slightly against the euro, a day after EU leaders and the UK agreed on a “flexible extension” of Brexit until 31 October following an emergency summit in Brussels. GBP has remained sensitive to Brexit movements over recent months – and sterling is likely to remain in a state of flux, experts have said. Since the start of this year, Sterling has fluctuated around seven per cent versus the euro. The pound is currently trading at €1.158 against the euro, according to Bloomberg at the time of writing.
Ian Strafford-Taylor, CEO of currency expert, FairFX said: “The second extension to Article 50 means we have avoided crashing out with a no-deal Brexit which could have been very damaging for the pound.”
“However, the pound has been on a rollercoaster journey against the euro since the referendum back in 2016.
“The continued uncertainty that comes with this extension means the pound is still very much vulnerable to volatility.
“Since the start of the year we’ve seen the pound fluctuate almost seven per cent against the euro, compared to the day of the referendum it’s still down nearly 11 per cent.
“This means holidaymakers heading off over Easter will now get £122 less worth of euros for every £1,00 they exchange.”
The outcome from the Brexit delay yesterday rules out a no-deal happening on Friday, less than 48 hours before the scheduled date for the UK’s withdrawal.
European Council President Donald Tusk said that the “flexible extension” would provide “an additional six months for the UK to find the best possible solution.”
It is understood that the UK would be able to leave earlier if Parliament comes to an arrangement on the withdrawal agreement.
Chris Turner, head of foreign exchange strategy at ING, said: “The extension is unlikely to improve business confidence much, thus limiting the upside to GBP.
“The rising probability of a change in Conservative Party leadership ahead of the new October deadline suggests a difficulty for EUR/GBP to move below the 0.85 pence level.”
Louis Bridger, Head of ICE (International Currency Exchange), said: “While this decision will give the Prime Minister more time to plan and implement a deal, unfortunately, the delay will likely cause more uncertainty for Brits travelling abroad.
“Every time there has been added Brexit turbulence, it hasn’t been good news for the strength of sterling.
“A weaker Pound would, of course, mean more expensive holidays for Brits but our message to travellers is ‘don’t panic’.
“If you’re already planning to travel over the coming months, you can hedge your bets and get some currency now and some later.
“Just make sure that you’re savvy about the method you choose to get your currency – plan ahead and get your currency online, rather than leaving it to the airport. Prepaid cards are also a great way to secure a rate without having to sit on cash.”
The Post Office is currently offering a pound to euro exchange rate of €1.1252 for over £400 and €1.1380 for over £1000.