The pound plummeted to its lowest rate against the euro since April, sparking fears that it might be heading towards parity.
Sterling had been rallying in recent months, touching €1.17 to £1 in June. But one pound would now buy just over €1.1. It has also dropped in value against the US dollar, making £1 worth $1.63, down from $1.70 just six weeks ago.
Holiday-makers may not welcome the downturn in the pound’s fortunes, but Mervyn King, the Bank of England governor is upbeat. Mr King maintained that a weak pound was helpful to the economy as it would encourage exports at a time when trade out of the country was flagging.
Pounded but not beaten
The weakened pound is widely blamed on the high levels of debt in the UK. Which? travel money expert Dan Moore said: ‘The pound’s diminished value will probably spark fresh claims that we’re heading towards parity with the euro, as some were towards the end of last year. In fact, although weakened, sterling’s still more robust that it was then. However, that shouldn’t dissuade travellers from shopping around for the best ways to get foreign currency.’
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