Sterling this week fell to a fresh eight-year low – an official rate of just over €1.08 against the EU’s single currency, after solid data out of the bloc underscored the diverging performances of the UK’s and the European Union’s wider economy.
Travellers obtaining last-minute holiday cash from Southampton airport’s Moneycorp branch on Thursday, however, were getting just 87 cents for every pound – the worst rate since the financial crisis.
The pound has tumbled more than 15 per cent against the euro since the UK voted to quit the EU in June 2016, unleashing a wave of uncertainty and battering many foreign investors’ confidence in UK financial assets.
Economists at UniCredit wrote in a note to clients on Thursday that the “upward trend” in the euro’s value against the pound “is showing no signs of slowing down”.
Strategists at Morgan Stanley wrote in a note on Wednesday that the pound’s weakness “is no longer inspiring foreign buyers to come into the market”. They said that they are more optimistic on many other currencies, including the otherwise weak US dollar, and that they think buying the euro against the pound is the most sensible trade at the moment, indicating that they expect the single currency to become even stronger against sterling in the short term.
Last week strategists at the US bank said that the pound would be worth less than the euro on official exchanges by early next year.
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