Why is the pound so low against the euro?

18th August 2017

Finance
Why is the pound so low against the euro?

The holiday season is in full swing.

And whether you prefer sun, sand and sangria or meze, Metaxa and monuments, it can’t have escaped your notice that the whole getting-away-from-it-all thing is a lot more expensive now.

At least, that is, if you’re a Brit bound for the eurozone.

The pound is touching 10-month lows against the euro at the moment at 1.0981 euros.

And currency strategists at US investment bank Morgan Stanley are even forecasting that the euro could move “beyond parity” with the pound on the currency markets for the first time ever in early 2018.

The last time the rate was within even spitting distance of that was back in 2008, when it was languishing at about 1.0200 euros.

Of course, there have been well-publicised occasions, even in the the past year, when people have got less than one euro to the pound at some currency exchanges.

But if that barrier were breached on the wholesale markets, it would be a “hugely important psychological” event, one unheard-of in the currency’s 18-year history.

Of course, every cloud, as they say: the weak pound has attracted huge numbers of tourists from the eurozone to the UK.

April saw a record 2.93 million eurozone visitors – up from 2.499 million in April of last year, according to the Office for National Statistics.

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