The pound has climbed against the euro after figures showed Italy fell into recession at the end of 2018, while German consumers stopped spending in December. Sterling has endured a political rollercoaster this week after MPs voted in Parliament on Brexit for Prime Minister Theresa May to return to Brussels to try and thrash out the arrangement of the Irish backstop. The pound is currently trading at €1.144 against the euro, according to Bloomberg at the time of writing. Laura Parsons, currency analyst at TorFX, spoke to Express.co.uk regarding the latest exchange rate figures.
“The GBP/EUR exchange rate was able to advance 0.4 per cent on Thursday,” Parsons said.
“While the pound struggled against the other majors due to a lack of positive UK news, the euro broadly softened in response to the news that the Italian economy returned to recession for the third time in ten years.
“Today GBP/EUR could be moved by the UK manufacturing PMI, which is expected to show a decline in output.
“However, any pound losses could be limited if the Eurozone’s inflation report shows a softening in consumer price pressures.”
In UK political news, concerns are rising over whether Theresa May can secure a deal with Brussels over the newly-amended Brexit withdrawal deal, with the EU showing an increasing unwillingness to renegotiate terms on the Irish backstop.
European Council president Donald Tusk has insisted that the Withdrawal Agreement struck last November was not open for renegotiation.
Pound traders are focusing on the possibility of an extension to Article 50, which May has not ruled out, with the Foreign Secretary, Jeremy Hunt, also remaining open on the issue today.
Mr Hunt said: “I think that depends on how long this process takes… We can’t know at this stage exactly which of those scenarios would happen.”
Michael Brown, Senior Analyst at Caxton FX said: “As the Prime Minister heads to Brussels to attempt a renegotiation of the Irish backstop, EU leaders continue to maintain their position that the Withdrawal Agreement will not be reopened, casting doubt on the government’s plan ‘B’.
“While the markets have absorbed some uncertainty based on a low probability outcome of a ‘no-deal’ exit, the Pound suffered a setback earlier this week, falling by around 0.8 per cent, after amendments that would have ruled out such an outcome were not passed in Parliament.
“Sterling is unlikely to significantly extend its gains in the coming weeks unless official confirmation of an extension to Article 50 emerges and as the political uncertainty continues.
“Overall, it is likely that the Pound will begin to drift lower ahead of the second ‘meaningful vote’ if the current stalemate continues with a reversal of this month’s gains becoming more likely.”
As for buying travel money, Greg Baggio, Head of FX at WeSwap said: “In order for holidaymakers to ensure they get the best exchange rates, they should be aware of these important dates and plan when they buy their holiday money accordingly.
“WeSwap’s research has found that nearly half of all Brits find and buy their foreign currency in the space of one day, leaving them vulnerable to forces beyond their control that dictate the strength of the pound.
“When shopping across travel money providers, UK travellers should also shop across a period of time for a stronger rate. Without the use of technology that allows users to set their desired exchange rate, holidaymakers are left watching the exchange rate move up and down.”