The fall of the pound on no-deal Brexit fears have come to a terrible time for British holidaymakers because many are going abroad this summer.
Here is an overview of the reasons behind the fall from sterling to two-year lows and what this means for Britons:
– Why has the pound fallen so low against the US dollar and the euro?
Sterling has plummeted after the new Prime Minister Boris Johnson and his cabinet adopted a tough stance in the negotiations with the EU on the Brexit.
Cabinet minister Michael Gove wrote in the Sunday Times that a & # 39; no deal is now a very real prospect & # 39; and the government & # 39; working on the assumption & # 39; of a no-deal Brexit, which led to a sharp fall in the value of the pound on Monday, with no delay in the declines on Tuesday.
Johnson has since urged & # 39; to go the extra thousand miles & # 39; to close a deal, but with just two months to go until the Brexit deadline of October 31, many believe he has set the UK on track for an excellent Brexit.
– How low can the pound go?
Some experts believe that the worst case scenario of a hard Brexit is still not fully priced in the pound, which could well mean that the fall of the Brexit deadline is getting large and there are more speculations about the general election.
There are fears that the pound may hit parity with the euro or fall below it – already falling to 1.09 against the single currency – and even reach parity with the US dollar as the Brexit unfolds.
– What does this mean for the British?
The immediate impact of the falling pound is felt by British travelers on their way to their vacation.
At tourist rates, the pound has already fallen below parity at airports, where holidaymakers are offered only 97 cents for their pounds.
This means that travelers to Europe will find that their pounds are not going very far, while they also get a bad dollar rate when they go to the US or to countries where the greenback is the main currency – increasing the cost of everything from accommodation to food .
Nigel Green, founder and CEO of financial consultancy firm DeVere Group, said the falling pound will have an impact on holidaymakers wherever they travel.
He said: & # 39; Even destinations such as Dubai and China are more expensive because their currencies are linked to the US dollar. & # 39;
& # 39; In general, the pound is the worst performing major currency in the last three months, meaning that almost every destination is now more expensive than for the British, & # 39; he added.
– Is it only vacationers who are hit by the pound tumbling?
Unfortunately, all British consumers are being hit by a continuing decline in the value of the pound, as it becomes more expensive for retailers and manufacturers to import food, goods and materials.
This means that prices for goods and services will rise, causing British inflation to rise and Britons hit hard.
– Are there benefits for a falling pound?
A weak pound can be useful in a variety of ways, making it cheaper for foreign companies to buy British goods and boost exports.
It can also increase foreign investment in the UK, for example in real estate and in shares.
The FTSE 100 index on the London stock market usually rises when the pound falls, because it is dominated by internationally oriented companies, which largely trade in US dollars.
A falling pound can also increase tourism to the UK, with foreign travelers looking for a better exchange rate.
This offers a boost to retailers and other sectors such as restaurants and recreational attractions.
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