Here is our guide to what is happening in the euro currency market and how Brexit is affecting your cash.
What is today's pound to euro exchange rate?
The pound is trading at 1.15 against the euro as of 17.40 on January 25.
It has begun to rise again after the pound dropped heavily in November and remained low in December.
A weaker pound is better for British exports – but imports will cost more, potentially driving up inflation.
It also means your money doesn't stretch as far when going abroad on holiday.
Before the November drop the exchange rate had remained relatively stable for months following a more volatile period earlier in 2018.
Sterling dipped below €1.12 on March 7 and then reached almost €1.16 on April 17.
In August 2017 the rate briefly plunged under €1.08, the lowest for nearly a decade, but it quickly recovered.
Before the EU referendum in June 2016 a pound was trading for around €1.30. Sterling fell around 15 per cent after the result.
The highest rate in recent years was €1.42 in November 2015.
What affects the exchange rate?
Foreign exchange (forex) markets allow currencies to be bought and sold around the world.
They are necessary for international commerce but are also opportunities for traders to make a profit by effectively gambling on whether rates go up or down.
As in any market, rates are determined by the price that buyers and sellers are willing to accept.
If more people are buying than selling the price will go up, and vice versa.
Traders' confidence in a country's economic health is the biggest factor shaping forex markets.
Reports and forecasts on GDP growth, inflation, employment, retail sales and manufacturing can prompt traders to buy or sell a country's currency.
Other factors that sway forex markets include interest rate decisions by central banks (such as the Bank of England), and news such as the signing of a trade deal or a natural disaster.
Movements in global capital markets, bond markets and stock markets can also influence forex trading.
Banks and money changers who sell holiday cash broadly follow foreign exchange markets in the rates they offer the public.
The buy and sell price for each currency is usually a few percentage points either side of the "true" rate so they can make a profit even if there is no commission.
Unstable and unpredictable government events can also negatively impact the pound's strength in trading.
Following the resignations of Theresa May's Cabinet in response to her draft Brexit proposal on Thursday, the pound plummeted to its lowest value in over a year.
How can I get the best currency rates?
- Don’t buy cash at the airport – you’ll always be able to beat the rate with a bit of forward planning
- Compare travel money companies online – Factor in delivery costs and choose the option that gives you the most cash to spend on holiday. If you’ve left it until the last minute order online for airport collection so you get the best of both worlds.
- Use comparison tools – MoneySavingExpert’s TravelMoneyMax enables you to compare pick-up and pre-order rates.
- Don’t pay for travel money with a credit card – it’s likely you’ll be charged a cash withdrawal fee which adds to the cost.
- Top up a prepaid card to lock in your rate now – Choose your card and read the T&Cs carefully as some apply hefty fees. WeSwap, FairFX and Caxton FX are all worth checking out.
- Always choose to pay in the local currency rather than sterling – This will help you avoid sneaky exchange fees
Where is the best place to get euros?
Euros can be bought at supermarkets, such as Marks & Spencer, as well as the Post Office and currency specialists – but rates vary massively.
The best rates can often be found at specialist online outlets, such as Travelex, which will deliver cash directly to your home.
Travellers can use comparison sites, like MoneySavingExpert's TravelMoneyMax, to find the best rate.
If you order in advance and pick up the cash then you’ll most likely get a better rate than if you walk into a bureau de change.
Alternatively, providers such as FairFX and WeSwap offer currency cards that can load up at a good rate and then use abroad like a debit card without transaction fees on each purchase.
You can always buy last-minute currency at the airport or withdraw cash at your destination, but it's almost always cheaper to buy before you go.
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