Pound helped by Trump effect

The pound is 6 per cent up against the euro in the past few weeks, at €1.16 and it's up against the dollar as well at $1.26.

It's still sharply down since the Brexit vote, but first the court decision that the government must get parliament to trigger Brexit and now the Trump victory have caused a little bounce.

Here's some comment from Rupert Lee-Browne, Chief Executive of currency firm Caxton FX.

"For holidaymakers it's a little bit of good news.
This is definitely a rebound after some very positive comments from President-elect Trump.
He's indicated he wants America the UK to continue with the special relationship and that has lifted spirits in the currency market.
There's also an uplift from talk about higher inflation in the UK which might lead to higher interest rates and there may be room for the pound to move higher.
But there is always the worry about Brexit and that could bring sterling down going forward."

Pound helped by Trump effect

The pound is 6 per cent up against the euro in the past few weeks, at €1.16 and it's up against the dollar as well at $1.26.

It's still sharply down since the Brexit vote, but first the court decision that the government must get parliament to trigger Brexit and now the Trump victory has caused a little bounce.

Here's some comment from Rupert Lee-Browne, Chief Executive of currency firm Caxton FX.

"For holidaymakers it's a little bit of good news.
This is definitely a rebound after some very positive comments from President-elect Trump.
He's indicated he wants America the UK to continue with the special relationship and that has lifted spirits in the currency market.
There's also an uplift from talk about higher inflation in the UK which might lead to higher interest rates and there may be room for the pound to move higher.
But there is always the worry about Brexit and that could bring sterling down going forward."

Pound on the rise

The pound's value measured against a basket of other currencies, including the dollar and the euro, has reached its highest level for more than 4 years.

The trade-weighted index stands at 85.0. It was last at that level on 5th August 2009, during a rally as the financial crisis and recession began to take hold.

The pound has been surging ahead amid growing hopes about the scale of the economic recovery.

The called the trade-weighted index, called the effective exchange rate by the Bank of England, shows the pound's value in comparison to the currencies of our main trading partners.

The index was based at 100 in January, 2005. It fell to 74 in late 2008.

Pound bounces higher

Holidaymakers going to the eurozone are getting 15% more for their money than a year ago.

Jitters about the debt crisis across Europe have knocked the euro and pushed the wholesale rate up to levels not seen since October, 2008.

The pound rose again this morning, to 1.2736 euros.

Of course, you get less at the bureau de change, but still a much better rate than before. Here are a few of today's retail rates:

Caxton FX currency card                 1.2450
Sainsbury online                             1.2430
Thomas Cook (reserve and collect)   1.2360
Travelex online                                1.2350
Post Office                                      1.2340
High Street                                      1.2100

It's a very volatile situation but some currency experts are predicting the euro will fall even further.

Not the same story with the dollar. Travellers heading over the Atlantic will find that their pounds buy them fewer dollars than a year ago.

Pound sags again

The pound has looked a bit spongey against the dollar over the past few days, we are being told. It's held most of its gains against the euro, holidaymakers will be glad to hear. Though sterling has lost a bit of ground there as well.


But looking at the the trade-weighted index - that's sterling against a basket of currencies* - you can set the recent movements in a bit of context.


The pound peaked at 106.8 on 23rd January, 2007. (The index is set at 100 from the start of 2005.)


Then the credit crunch and financial crisis saw it drop to 73.7 at the end of 2008.


That's what a devaluation looks like: a 31% drop.


Since then sterling has been clawing back a little ground, up and down, bit bit.


It sagged to 77.6 in April last year, then rose to 84.5 on 14th May this year.


Now it has slipped a bit, down to 83.6.


Where are we? 13% above the low in 2008.


But still 22% down from the pre-crisis peak. Still devalued.
.
*Bank of England definition: "The sterling effective exchange rate index is a measure of the overall change in the trade-weighted exchange value of sterling, calculated by weighting together bilateral exchange rates. It is designed to measure changes in the price competitiveness of traded goods and services and so the weights reflect trade flows in manufactured goods and services."

Jump in euro rate for tourists

Leading bureaux de change are selling euros at a rate of 1.20 to the pound for the first time in three and a half years.

The jump reflects worries about the eurozone in the wake of the Greek and French elections. But the result is that British travellers are getting 10 per cent more for their money than a year ago.

Travelex is offering 1 euro 20.8 cents -- it was last above 1.20 on 4th November, 2008. The Post Office is paying 1euro 20.7 cents.

High Street banks are still offering lower rates, but some specialist money-changing services will pay even more.

The rate at certain Sainsbury's stores has risen to 1 euro 21.19 cents.

£ buying you more travel money

The pound is rising again in the international currency market, amid continuing worries about the financial state of the eurozone.

Sterling has touched 1.2330 to the euro in the wholesale market today, its highest since June 2010.

What that means is that bureau de change rates are approaching 1.20, having dropped close to 1:1 parity last summer.

Tavelex is offering 1.1950 online.

The Post Office Rate is 1.1940

M&S Money has 1.1788

Pound down 31%

UPDATE: pound now buys 1.2241 euros...

It's only three years since the pound sank to near parity with the euro. In other words, a pound and a euro were worth virtually the same amount.

In the wholesale market you could buy just 1.02 euros with each pound at the end of 2008.

So tourists heading for the Eurozone this week will feel a lot more comfortable about the current exchange rate of 1.2155 euros to the pound (update - now 1.2241) - up 19% from the depths of the financial crisis.

(You get a few cents less than that, of course, once money-changing charges are taken off.)

It's worth putting these numbers in a bit of historical context, though, because travellers face a much lower exchange rate than a decade ago - and businesses are still benefiting from a sizeable devaluation in comparison to their Eurozone competitors.

The euro was born as a notional currency in 1999. The pound bought 1.7510 euros at its peak in May, 2000.

Euro notes and coins were launched on New Year's Day in 2002. Even during during that year the pound reached 1.6404.

So sterling is still 26% lower than in 2002 and 31% down on the millennium year, 2000.

Between January 2007 and December 2008, the pound fell by 32%.

According to the ECB (European Central Bank), the average value of the the pound during this period has been 1.4084, substantially higher than the current rate.