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UK General Election Impact On The Pound-To-Euro Exchange Rate: Should Holidaymakers Exchange Their Money Now?

December 6th, 2019

It is not easy to determine whether the purchasing power of a currency fluctuates in anticipation of government policies or as a reaction to them. However, there can be no doubt that politics and the economy go hand-in-hand, with one usually having a significant effect on the other.

The UK general election will take place on 12 December, and many people are wondering how it will affect the pound-to-euro exchange rate. The general election may shake things up and cause some significant changes in the placement of the pound sterling.

How will the UK general election affect the pound-to-euro exchange rate?

With the UK general election around the corner, campaign activity by political parties is already picking up speed.

Depending on the contesting parties and the promises they make towards the UK’s future, most experts are speculating that the general elections may impact the pound-to-euro exchange rate.

The pound is currently trading at a rate of 1.18 against the euro at the time of writing. Only time will tell if it will tumble or soar in the future as a direct result of the election.

A pound-to-euro forecast based on the coming elections

The GBP/euro pair is one of the most popular currency pairings as both the British pound and the euro are ‘majors’ – that is, they rank among the top eight frequently traded currencies in the world. The immediate fallout of Brexit saw a massive devaluation of the pound in the international market. Things improved since 23 June 2016, when the UK voted on a referendum and chose to ‘leave’ the European Union (EU), effectively terminating its membership with the EU. However, reaching pre-referendum exchange rates is yet to be achieved.  

How can the UK general election affect holidaymakers and travellers?

How the pound will fare against the euro in the future is open to speculation, so the question on everyone’s mind is whether they should exchange their money right now or not. Holidaymakers and travellers are especially worried and with good reason.

A recent research by Globehunters revealed that a traveller heading to Europe before Brexit with £100 would end up with €130.07. However, this figure has dropped significantly since, and at the time of writing, £100 will fetch you only €118.39.

The above figures suggest that after the UK election, the exchange rate may witness fluctuations, and it could impact holidaymakers positively or negatively.

Should holidaymakers exchange their money now?

The best way for holidaymakers to protect their money would be to exchange it once they are satisfied with the prevailing exchange rate. For those who are happy with the current exchange rate, now is the right time to transfer their money. Due to the uncertainty around the coming election, it might be a good idea. After all, the pound is riding high at the moment, so it would make total sense to buy travel money right now.

For others who are still unsure, it would be a good idea to exchange half their money right now and the rest only if the pound strengthens even more – or begins to weaken, for that matter. The possibility of the pound falling further against the euro due to future political events is very real. So, buying half their holiday money now and half later would ensure that they do not end up paying higher rates on all their cash. 

Ultimately, holidaymakers must do some research and keep an eye on upcoming political news and events to determine the changes in the exchange rate. Pound to euro, as of now, is enjoying a pretty good exchange rate. But this could change in the future, so if you are planning a holiday, you need to monitor exchange rate fluctuations at all times.

Conclusion

Given the current scenario, there remains little doubt that the UK general election will most likely affect the pound-to-euro currency exchange rate. If you are planning a holiday, you need to understand that there’s much uncertainty surrounding Brexit and the forthcoming general election. The best practice would be to stay aware of the current political environment and act fast to get the best value for your money.

Click here to know how to transfer money from UK instantly.

Also, Read: Exchange Rates and the Impact of GBP on Remittances