The pound was enjoying a steak of growth against the euro just one month ago amid the positive vaccine rollout, however, since then it has plummeted as Brexit rears its head once again. Rising tensions between the UK and European Union (EU) could “threaten” UK trade, according to one expert.
The trade conversations come ahead of this weekends G7 summit in Cornwall.
Mr Vessey said: “The British pound eventually gave up ground on Wednesday following an increase in tensions regarding post-Brexit UK-EU trade.
“Despite the calmness of currency markets of late, sterling volatility crept higher as a result, and GBP/EUR fell under the €1.16 mark on Thursday morning.”
He continued: “The pound has been overlooking the UK-EU tensions of late, but the recent standoff about the Northern Ireland (NI) protocol ahead of the key G7 summit this week triggered a wave of sterling selling – dragging GBP pairs lower.
“The EU is considering advancing its legal challenge as a result of the UK Government’s unilateral extension of a grace period for goods moving into NI from Britain.
“This could result in tariffs and quotas being imposed, which would harm UK trade and probably cause headwinds for the pound.
“Eyes are on US President Joe Biden in case he weighs in and suggests a UK-US trade deal could be compromised, which would likely weaken the pound further.
“GBP/EUR is on track for its first weekly decline in five weeks after failing to reclaim the €1.17 handle over the past two months.
“The upside traction looks to be tiring, but short-term support lies at the 50- and 100-day moving averages before €1.15.”
For those looking to jet off on holiday in the coming weeks and months, there remains an air of uncertainty.
Whether or not countries will be added to the green list at the next review has not yet been clarified.
Ian Strafford-Taylor, CEO of travel money specialist FairFX advised: “Britons hoping for an overseas break should keep an eye on any announcements and watch the pound closely to make sure they’re getting more bang for their buck by securing the best rates available for their travel money.”