Brits offered worst euro exchange rate on record
British holidaymakers travelling to Europe face one of the worst exchange rates on record this weekend, with the pound falling to less than €1 in some places a year on from the Brexit vote.
As families prepare to travel to the continent on the first day of the school holidays, people flying out of British airports have been offered as little as 88 cents for a pound. Gatwick, Luton and Birmingham airports were all offering less than €1 to the pound – the worst rate in eight months – while Cardiff airport exchanged just 88 cents.
Experts said that was possibly the worst euro exchange rate ever seen at any UK airport – traditionally the most expensive places to buy foreign currency. The Travelex foreign exchange booths at Heathrow, Manchester and Glasgow were meanwhile offering almost exactly €1 to the pound.
It marks a stark decrease on previous years, with Britons travelling to Europe having received more than €1.41 for each pound in the first week of the school summer holidays in 2015. It comes as sterling dived from €1.132 on Thursday morning after the UK and EU fought over the Brexit bill, amid estimates that the bloc has demanded up to £90bn in the divorce.
EU chief negotiator Michel Barnier warned British peers the EU will go into meltdown as the result of an economic “explosion” caused by the UK refusing to pay any Brexit bill.
The pound has fallen two per cent this week alone, and only remains above last November’s low of €1.10. Brexit negotiations are thought to have played a role in the plunge, but higher staff and property costs at airports have also been blamed for the poor exchange rates. According to Derek Halpenny, European head of global markets research at financial firm MUFG, said the pound over the last five trading days was ”by some distance the worst performing” of the 10 most heavily traded currencies in the world.
He said: “The pound is by some distance the worst-performing G10 FX over the past five trading days and has dropped 0.85 percent versus the US dollar – the only G10 currency to fall versus the dollar over that period.”
But Mr Halpenny added that he was upbeat on the currency going forward, viewing political risk as easing off. He cited reports that the British cabinet was united over the need for a transitional period when Britain leaves the European Union as important. “We view the emerging signs of a cabinet deal on Brexit direction as very significant and are somewhat surprised by the muted attention this important development is currently receiving,” said Mr Halpenny.
Prime Minister Theresa May moved to ease concerns over Brexit among British business on Thursday, saying she wanted a “smooth, orderly exit” from the EU including “a period of implementation in order to avoid any cliff-edges”.