Why Has The Pound Dropped?

Kid Rock declared a Bud Light boycott. Here’s what CNN saw at his bar 03:24 Now playing – Source: CNN London CNN — The British pound crashed to a record low last fall as investors rebelled against budget plans by former Prime Minister Liz Truss. Now, it’s enjoying a comeback. Sterling hit its highest level against the US dollar in 10 months on Tuesday, topping $1.25 for the first time since June 2022. The pound, which has advanced about 3.3% versus the greenback since the start of 2023, is the best-performing currency among developed economies this year. The UK currency has been boosted by indications the country’s economy is holding up better than expected. Activity is now thought to have expanded 0.1% in the final three months of last year, up from a previous estimate of no growth at all. Gross domestic product growth in January has been estimated at 0.3% after dropping 0.5% in December. This resilience is bolstering expectations the Bank of England will maintain aggressive interest rate hikes despite concerns about the health of the global banking sector. Rising rates can boost the domestic currency because they help attract foreign investors searching for higher returns. Inflation in the United Kingdom also jumped to an annual rate of 10.4% in February, underscoring the need for the Bank of England to maintain its tough approach. The pound plunged close to $1.03 in September 2022 after the Truss government unveiled plans to boost borrowing while slashing taxes, unleashing panic in financial markets that fueled fears of a recession in the United Kingdom. The International Monetary Fund predicted in January that the UK economy would contract by 0.6% this year, while all other advanced economies would grow, if only slightly. “There was a lot of pessimism being priced into the pound,” said Francesco Pesole, a currency strategist at ING. But the sharp pullback in energy prices and China’s reopening have provided some relief about the economic outlook since the start of the year. “There was a big re-rating of growth expectations around Europe, and that impacted the UK,” Pesole said. The euro has also been lifted by these dynamics, rising 2.3% against the US dollar in 2023. The pound’s rally has been sharper in large part because its 2022 declines were more severe, according to Pesole. Both currencies have been aided by the greenback’s sharp drop from highs reached last September as recession fears have percolated in the United States. A lack of clarity around the Federal Reserve’s next steps has also restrained the dollar in recent weeks. Investor speculation has increased that the Fed could pause or stop rate hikes due to concerns about the economy following the failure of Silicon Valley Bank last month. Jordan Rochester, a currency strategist at Nomura, said he thinks the pound could rise to $1.30 this year and “potentially higher.” But he still sees risks given the uncertainty surrounding the Bank of England’s plans and how rate rises will feed back through the country’s economy. And Pesole cautioned that currency fluctuations are often overdone when markets are choppy, as they are now. “In a volatile market environment, moves are exacerbated,” he said.

Why is the pound dropping bad?

Why is the pound so weak? – The value of the pound against the dollar has been on a downward path for much of this year. Several factors, including soaring energy prices and the war in Ukraine, mean the UK’s inflation figure has shot up during 2022, prompting ever-increasing fears that the nation’s economy will slide into recession.

1. In recent days, there have also been major concerns that the tax cuts and increases to public spending announced by the newly-formed Conservative government, under prime minister Liz Truss, could exacerbate price pressures.
2. The result of this has been to make the markets extremely jittery.
3. Alice Haine, personal finance analyst at Bestinvest, says: “A plummeting pound is often considered a gauge of the outlook for the UK economy, with the dramatic declines in sterling seen since the Chancellor unveiled his tax-cutting mini-Budget on Friday indicating just how much the markets were spooked by the Government’s fiscal plan.” In contrast – and despite facing similar economic conditions and inflationary headwinds – the US dollar is relatively attractive because it is by far the largest reserve currency for the global economy.

This means it is the main currency that countries hold to weather economic shocks, pay for imports and service debts. By dint of being the world’s reserve currency, the dollar is also regarded as a safe haven in uncertain economic times. Brian Byrnes, head of personal finance at Moneybox, says: “The US dollar has been strong across the board this year, strengthening to parity with the euro in recent months.

Against sterling, it has also been gradually strengthening over the course of 2022, but the pace has picked up in the last few days since the government’s recent ‘mini-Budget’. “Currency markets seem to have little faith in Kwasi Kwarteng’s measures to raise growth prospects and have been selling off the pound in response.

Meanwhile, the US Federal Reserve has raised interest rates faster than most of its global counterparts, creating strong demand for the dollar. “Parity between the pound and the dollar was unthinkable not long ago, and now it seems not far away.”

Will the pound ever recover?

Why Sterling Recovered in 2023 and Forecast for Rest of Year

After being one of the worst performing currencies of 2022, the Pound has staged an impressive recovery against the US Dollar, rising 15% from the depths of last September’s crisis.

After years of decline, markets are now more optimistic the Pound will continue to strengthen. But why is the Pound rising when many in the UK face a cost of living crisis? And is the Pound’s apparent recovery really as good as it looks? If we look at the value of the Pound to Euro, we can see little recovery but only a long slide and the depreciation of the past 20 years.

Is pound getting stronger against euro?

GBP/EUR forecast for 2023 and beyond – In their latest outlook issued on 20 March, Citibank was bullish on the British pound, predicting the GBP rise to $1.22 in the next three months, accelerating to $1.25 in 6-12 months, and trading at $1.40 in the long-term.

1. The US investment bank’s forecast for EUR/USD saw the currency pair trading at $1.10 in three months, $1.15 in 6-12 months, and $1.20 in the long-term.
2. While Citibank didn’t provide a direct pound to euro we can calculate their GBP/EUR forecast for 2023 from the price targets above.
3. The cross rate from the forecasts above concludes that the bank expected the rate to trade at €1.109 in three months, slumping to €1.08 in the next year, yet recovering to €1.166 in the long term.

Meanwhile, Rabobank’s Jane Foley expected EUR/GBP to edge to £0.88 in the next three months, which would amount to the GBP/EUR forecast of €1.136. The market strategist said that further policy by BoE would be key in determining the outlook: “Ahead of the recent financial sector tensions, the question of whether the BoE could be approaching a pause in policy had already been raised in the market.

• BoE Chief Economist Pill had raised the topic of overtightening given the extent of the policy moves already announced this cycle.
• The BoE can be expected to offer further reassurances around the banking sector this week.
• Given the current uncertainties, there may be little by way of forward guidance on policy.

We have pared back our EUR/GBP forecasts and expected the pair at 0.88 on a 3 month view.” Analysts at JP Morgan have forceasted that the GBP/USD is forecast to fall to 1.18 in June 2023, to 1.16 in September 2023 and to 1.15 in December 2023. Locke said: “Although the U.K.

has some exposure to the drivers of better European growth, namely lower gas prices, it is also perhaps less primed to benefit from this given lower trade intensity with the continent post-Brexit.” As of 12 May, the GBP/EUR forecast from TradingEconomics expected the exchange rate to trade at 1.24 by the end of the second quarter of 2023, and at 1.11939 in early 2024, based on global macro models projections and analysts expectations.

The GBP/EUR forecast for 2023 from algorithm-based forecaster Wallet Investor was bullish on the long-term outlook, predicting that the pair could trade at 1.124 in early 2024, and at 1.158 in five years’ time. The site’s GBP/EUR forecast for 2025 saw the pair trading at 1.133 in January of that year.

Will British pound continue to decline?

GBP to USD price predictions (GBP/USD) from AI-based websites – According to Trading Economics global macro models and analysts’ expectations. the British Pound is forecast to trade at 1.24 by the end of Q3 2023. Looking forward, the website estimates GBP/USD to trade at 1.17 in 12 months’ time.

• Another AI-based website, LongForecast, estimates GBP/USD to close in 2023 around 1.37.
• The website forecasted British Pound to reach a 1.32 high against the US Dollar by the end of Q3 2023 The British Pound forecast for the next 5 years is neutral, with GBP/USD trading around slightly below 1.30 after trading above 1.40 during mid-2024.

The GBP/USD forecast for 2023 from algorithm-based forecaster WalletInvestor was slightly bearish, with the pair set to trade close to 1.26 by the end of Q3 and fall below 1.25 by the end of the year. Regarding the British Pound’s long-term forecast, the website is predicting that the pair could trade between 1.19 and 1.26 during 2024.

• Analysts have not issued a GBP/EUR forecast for 2030, yet WalletInvestor went as far as 2028, predicting the pair will trade around 1.15.
• The monthly Pound / Dollar (GBP/USD) Forecast 2023 from PandaForecast is bullish for the second half of the year when the currency pair should trade as high as 1.34.

Their 5 years Pound forecast is very bullish with GBP/USD price predictions above 1.60.

What is the weakest the pound has ever been?

The Pound to Dollar rate reached an all-time low of $1.054 on 25th Feb 1985.

Will sterling fall against the euro?

The Euro recovered ground and ended the day higher against both the Dollar and British Pound following a report that suggested the European Central Bank (ECB) would release a higher-than-expected inflation report on Thursday. September 13,2023 GBPEUR risks slipping towards the bottom of its recent range over the coming days if UK wage data comes in below expectations and the European Central Bank (ECB) hits the right notes on Thursday. September 11,2023 GBPEUR was once again unable to maintain levels above 1.17 on a sustained basis following comments from the Bank of England that interest rates were close to a peak. September 7,2023 The strong rebound by Pound Sterling against the Euro over recent hours confirms a view that the UK currency might remain in touching distance with its 2023 highs over the near future. September 6,2023 GBPEUR) is forecast to remain supported above 1.16 over the coming days after a late-August pullback failed around 1.1620 and the subsequent rebound opens the door to another test of the 2023 highs. September 4,2023 The British pound is going for less than one euro at the UK’s largest airport as currency shops there charge continue to charge significant spreads. September 1,2023 The rule of thumb is that upside inflation surprises are supportive of a currency as they elicit additional central bank interest rate hikes. August 31,2023 Page 1 of 299

Will the euro get stronger?

EURUSD Forecast for 2024 – Forecasts for 2024 vary. Most experts believe that the EUR to USD will exit the current price channel and move into a new one with the lower border at 1.15 and the upper at 1.30 and will test many highs of previous years; however, others, on the contrary, believe that the euro/dollar will leave the current comfortable state with breaking the value below 1 USD per EUR.

Will the pound get stronger in 2023?

ING’s price prediction for GBP/USD is very bullish – Meanwhile, ING forecast GBP/USD to edge to 1.29 in Q3 2023 and 1.31 by the end of the year. EUR/GBP is forecasted to follow a flat trend during 2023, around 0.88. The bank expects GBP/USD to trade as high as 1.31 by the end of 2025.

Why euro is getting weaker?

The year 2022 was an extremely turbulent one for the euro. Analysts have described it as the ” worst year in the euro’s history “. The EUR/USD exchange rate was at $1.137 at the beginning of the year, but broke parity for the first time in 20 years in July, marking a 20-year low.

1. It reached a year-to-date (YTD) low of $0.960 on 27 September, following the indefinite shutdown of the Nord Stream 1 pipeline that month.
2. Following the ECB’s 75 basis-point policy hike on 27 October, the euro has recovered above parity, and the EUR/USD rate reached at $1.07 at the end of the year.
3. Figure 1 US dollar to euro spot exchange rate While economies around the world have suffered the impact of an economic slowdown due to the pandemic and the Ukraine crisis, the effects of these events have been exacerbated across Europe this year.

Three key factors have been identified as causing the depreciation of the euro in 2022:

Europe’s heavy dependence on Russian energy and the associated economic slowdown brought about by the Ukraine invasion. The widening of the monetary policy gap between the Federal Reserve (Fed) and the ECB. The role of the US dollar as a ‘safe haven’ during times of financial and political uncertainty.

Russia’s invasion of Ukraine greatly weakened the global economy through disruptions in trade, and food and fuel price shocks, but these effects have been felt more strongly in Europe compared to the rest of the world. In its Autumn 2022 Economic Forecast, the European Commission predicted that most EU member states would enter into recession in the last quarter of the year due to high inflation, weak growth rates, and elevated uncertainty (European Commission 2022).

The over-reliance of large European economies such as Germany and Italy on Russian gas has also resulted in energy-driven inflation being significantly higher in Europe than other economies, notably the US. Inflation in Europe reached 10.6% in October compared to just 7.2% in the US. Additionally, Bobasu and De Santis (2022) found that the Ukraine invasion and associated energy price increase has significantly increased uncertainty in the euro area, which negatively affected GDP and domestic demand in the euro area.

With the energy crisis bringing the EU’s terms of trade to their lowest level in its history, the euro’s depreciation relative to the dollar was an inevitable consequence of the Ukraine invasion. Some economists have also argued that the impact of the Chinese economic slowdown has hit Europe more than the US, leading to a weaker euro.

Daniel Lacalle argues that the Chinese slowdown was also putting downward pressure on the euro area’s trade surplus, and consequently, the euro could no longer maintain its strength relative to the dollar. Another driver of the euro’s depreciation is the relatively passive approach taken by the ECB to tackle inflation compared to the Fed.

The Fed adopted a more hawkish stance towards rising inflation, sending clear signals in June 2021 that it would increase interest rates to rein inflation under control. It increased interest rates in March 2022, which was followed by further, faster hikes.

• In contrast, the ECB defended its loose monetary policy until July 2022, when it increased interest rates for the first time.
• This ‘shallower’ path adopted by the ECB for their policy rates led to a widening of the interest rate differentials between the two economies, leading investors to flock from European to American assets.

As a result, since the Fed’s first announcement in June 2021 that it might raise rates, the dollar has appreciated by roughly 20% against the euro. Beckworth and Leeper (2022) have suggested that the ECB’s soft stance is influenced by the high debt levels of some euro area economies.

1. See also von Hagen (1999) for a historical perspective.
2. Yet another reason for a weaker euro is the perception that the US dollar is a safe asset, particularly in crisis times.
3. US assets, especially Treasury bonds, are generally viewed as a ‘safe haven’.
4. Investors therefore prefer to hold these assets during times of turbulence and uncertainty.

This usually leads to an increase in demand for these assets during crises, putting upward pressure on the dollar. The Ukraine crisis witnessed a similar trend, with the US dollar strengthening for three straight sessions in the wake of the Russian invasion.

Egorov and Mukhin (2021) argue that as the issuer of the ‘dominant’ global currency, the US is more insulated from foreign spillovers, and can also extract rents in international goods and asset markets, thereby benefitting from its global status. A weak currency could be a desirable side effect if its weakness is caused by developments in the real economy.

Beck et al. (2022) found that during an exchange-rate depreciation, large banks with high net foreign currency asset exposure increase lending to export-intensive firms and small banks, and regions with such small banks experience higher output growth.

• Conventional economic theory also dictates that a weaker currency boosts exports.
• However, as Mauro et al.
• 2017) summarise, there is still widespread disagreement amongst economists regarding the sensitivity of exports to exchange rate fluctuations.
• Ahmed et al.
• 2015) argue that the emergence of global value chains has led to a sharp decline in the elasticity of manufacturing export volumes to the real effective exchange rate.

Tsyrennikov et al. (2015) disagree, citing little evidence of a general disconnect in the relationship between exchange rates and exports and imports over time. Some economists have argued that the weak euro has been an ineffective stabilisation factor in this crisis.

With supply chain disruptions and sanctions looming in the background, European businesses have been unable to take advantage of their price competitiveness and profit from the lower real effective exchange rate (Colijn and Brzeski 2022). Additionally, with imports becoming more expensive, a weak euro significantly exacerbates inflationary pressures in the economy, compounding an already-grave problem.

There is much disagreement as to whether the ECB should take steps boost the euro or whether international coordination is desirable. Lodge and Perez (2021) found that due to globalisation effects, the exchange rate pass-through (ERPT) to inflation has declined in the EU to at around 0.3%, compared to 0.8% in 1999.

As such, an intervention in the foreign exchange market by the ECB may be a step ‘too far’. On the other hand, almost half of all cross-border loans and international debt securities are denominated in US dollars. Economists argue that if the currencies like the euro were allowed to weaken relative to the dollar, it could make debt repayment extremely difficult for the private sector, increasing the risk of debt distress (Gopinath and Gourinchas 2022).

However, Ethan Ilzetzki (London School of Economics) argues that high income economies like the EU are much more hedged against this type of risk, and that a strong dollar could actually improve the balance sheets of some institutions. Some experts have also cited the additional inflationary pressures created by a weak euro as a justification for the ECB to intervene and strengthen the euro.

What is the Pound Dollar prediction for 2023?

The 2023 Outlook for Major Currency Pairs GBP/USD is forecast to reach 1.20 in March 2023, before falling to 1.18 in June 2023, to 1.16 in September 2023 and to 1.15 in December 2023.

Will the Pound weaken in 2023?

Pound To Euro 2023 Forecast: Sterling To Weaken Towards 1.136 Say ING Foreign exchange analysts at ING Bank suggest the could be forecast to fall towards 1.136 against the Euro (EUR) later in 2023. The bank does however see the Sterling-Euro range-trading between 1.1560 and 1.1630 range in the near-term outlook. At the time of writing, the Pound to Euro exchange rate (GBP/EUR) was quoted at 1.15986, with markets settled for the weekend.

Has the Pound lost its value?

Brief History of the British Pound’s Sudden Fall in Value in 2022

Year	Average Closing Price	Annual% Change
2023	1.22	1.57%
2022	1.24	-10.52%
2021	1.38	-1.23%
2020	1.28	3.21%

What is the GBP to EUR in 2023?

This is the British Pound (GBP) to Euro (EUR) exchange rate history data page for the year of 2023, covering 245 days of GBP EUR historical data. Best exchange rate: 1.1746 EUR on 11 Jul 2023. Average exchange rate in 2023: 1.1465 EUR. Worst exchange rate: 1.115 EUR on 04 Feb 2023.

Is the euro expected to rise in 2023?

Summer 2023 Economic Forecast: Easing growth momentum amid declining inflation and robust labour market | EEAS The EU economy continues to grow, albeit with reduced momentum. The forecast revises growth in the EU economy down to 0.8% in 2023, from 1% projected in the Spring Forecast, and 1.4% in 2024, from 1.7%.

It also revises growth in the euro area down to 0.8% in 2023 (from 1.1%) and 1.3% in 2024 (from 1.6%). Inflation is expected to continue to decline over the forecast horizon. Harmonised index of consumer prices (HICP) inflation is now projected to reach 6.5% in 2023 (compared to 6.7% in the spring) and 3.2% in 2024 (compared to 3.1%) in the EU.

In the euro area, inflation is forecast to be 5.6% in 2023 (compared to 5.8%) and 2.9% in 2024 (compared to 2.8%). A reduced growth momentum Latest data confirm that economic activity in the EU was subdued in the first half of 2023 on the back of the formidable shocks that the EU has endured.

Weakness in domestic demand, in particular consumption, shows that high and still increasing consumer prices for most goods and services are taking a heavier toll than expected in the Spring Forecast. This is despite declining energy prices and an exceptionally strong labour market, which has seen record low unemployment rates, continued expansion of employment, and rising wages.

Meanwhile, the sharp slowdown in the provision of bank credit to the economy shows that monetary policy tightening is working its way through the economy. Survey indicators now point to slowing economic activity in the summer and the months ahead, with continued weakness in industry and fading momentum in services, despite a strong tourism season in many parts of Europe.

The global economy has fared somewhat better than anticipated in the first half of the year, despite a weak performance in China. However, the outlook for global growth and trade remains broadly unchanged compared to spring, implying that the EU economy cannot count on strong support from external demand.

Overall, the weaker growth momentum in the EU is expected to extend to 2024, and the impact of tight monetary policy is set to continue restraining economic activity. However, a mild rebound in growth is projected next year, as inflation keeps easing, the labour market remains robust, and real incomes gradually recover.

1. Inflation to further decline Inflation continued easing in the first half of 2023 as a result of declining energy prices and moderating inflationary pressures from food and industrial goods.
2. In the euro area, it reached 5.3% in July, exactly half of the peak level of 10.6% recorded in October 2022, and remained stable in August.

Energy prices are set to continue declining for the remainder of 2023, but at a slowing pace. They are projected to increase slightly again in 2024, driven by higher oil prices. Inflation in services has so far been more persistent than previously expected, but it is set to continue moderating as demand softens under the impact of monetary policy tightening and a fading post-COVID boost.

• The prices of food and non-energy industrial goods will continue contributing to easing inflation over the forecast horizon, also reflecting lower input prices and normalising supply chains.
• An outlook challenged by risks and uncertainty Russia’s ongoing war of aggression against Ukraine and wider geopolitical tensions continue to pose risks and remain a source of uncertainty.

Furthermore, monetary tightening may weigh on economic activity more heavily than expected, but could also lead to a faster decline in inflation that would accelerate the restoration of real incomes. By contrast, price pressures could turn out more persistent.

Mounting climate risks, illustrated by the extreme weather conditions and unprecedented wildfires and floods in the summer, also weigh on the outlook. Background The Summer 2023 Economic Forecast provides an update of the Spring 2023 Economic Forecast, which was presented in May 2023.

This is an interim forecast, containing GDP and inflation projections for the six largest EU Member State economies, the euro area and the EU as a whole. The latest economic developments for 21 other Member States are addressed in the overall analysis and are factored into the calculation of the EU and euro area aggregates.

• The Summer Forecast is based on a set of technical assumptions concerning exchange rates, interest rates and commodity prices with a cut-off date of 30 August 2023.
• For all other incoming data, including assumptions about government policies, this forecast takes into consideration information up until and including 7 September 2023.

The Commission publishes two comprehensive forecasts (spring and autumn) and two interim forecasts (winter and summer) each year. The 2023 edition of the summer forecast is being presented later than on previous occasions to enable it to incorporate several key data releases in July and August.

What is the pound to euro forecast?

Pound Sterling to Euro Rate: A September Forecast

• Image © Adobe Images
• August has confirmed and bolstered the view that the Pound to Euro exchange rate has now entered a sideways pattern, but rising volumes and downside data surprises could break the range over the coming weeks.
• But until the market narrative shifts, the downside in the exchange rate is liable to be relatively limited at this point, as is the upside potential for sellers of Pound Sterling.
• The increasingly predictable nature of the exchange rate does, however, present the benefit of being able to time and execute payments in a fairly well-behaved market.
• Above: GBPEUR at daily intervals showing the summer range which offers some tactical guidance for September.

The recent retreat in Pound-Euro from the briefly-tested 2023 high at 1.1772 confirms air above 1.17 is rarified and Pound Sterling bulls struggle for breath at these levels. The reinforces the range and brings a test of the lows towards 1.1540 into consideration over the coming days. A summer range has nevertheless evolved in which Pound-Euro has tended to spend most of its time above 1.16.

1. In fact, since June 01 the pair has only closed below this level on nine occasions.
3. We are watching Eurozone inflation due on August 31 for clues as to whether the ECB will raise rates again on September 14.
4. A hike and commitment to further hikes could the Euro against the Pound, although any boost could prove limited as markets will worry about the negative impact of hikes on the economy.
5. UK data is meanwhile unlikely to prevent a final Bank of England rate hike in September, something that is well anticipated by the market.
6. In all, this is a market waiting for the next ‘game-changing’ moment that will bring a sustained break of the summer range.
7. Fortunately, volumes are expected to increase again in September after the usual August lull, a month that typically does not favour the Pound.
8. Economic data releases are starting to surprise lower in both the EU and UK, offering a potential narrative shift that could break this range range in the Autumn.
9. From a broader perspective, the Pound had been dominant heading into the summer and could be further supported as the UK will end the interest rate hiking cycle with a Bank of England interest rate higher than that of the European Central Bank.

A move towards 1.20 could therefore be on the cards over the coming months. However, levels above 1.20 tend to be associated with Eurozone crises. Likewise, Pound-Euro below 1.11 (EUR/GBP 0.90) tends to be associated with UK crises. In the absence of a crisis in either the UK or EU we can expect these broad outlines of 1.20 to the top and 1.11 to the bottom to be respected over the coming months.

Where is the pound strongest 2023?

20 Countries Where Your Pounds Will Go Further in 2023 At the top of the list, the countries where Brit’s pounds will go the furthest this summer are Indonesia, Guinea, Paraguay, Colombia and Mongolia. Out of these countries, the pound has strengthened the most against the Mongolian Tugrik, appreciating 18.60% since 2022!

Indonesian Rupiah (IDR): Strengthened by 7.80% since last year, making it a favourable destination for budget-conscious travellers seeking exotic experiences. Guinean Franc (GNF): With a gain of 4.69%, Guinea beckons adventurers with its rich cultural heritage and vibrant landscapes. Paraguayan Guarani (PYG): Strengthened by a significant 11.74%, Paraguay offers an array of attractions and unique experiences to explore. Colombian Peso (COP): Despite weakening by 4.58%, the pound still remains strong against the COP making it a destination where your money will stretch further for exploring its diverse landscapes. Mongolian Tugrik (MNT): Another currency not highlighted before, the Mongolian tugrik has strengthened by an impressive 18.60%, making Mongolia an intriguing option for those seeking adventure in its vast landscapes.

Jonathan Merry, travel expert at, comments: “Many British holidaymakers are travelling abroad this year thanks to making numerous sacrifices in other parts of their lives due to rising costs across the board – and so it makes perfect sense to want to get more out of your pound.Tourists should be pleased to know that from the stunning islands of Indonesia to gorging on arepas in Colombia, your pound will stretch that bit further in 2023 compared to last year.”As the travel industry slowly regains momentum towards pre-2020 figures, the cost of living crisis is certainly preventing many Brits from travelling abroad as frequently as they usually would.However, the currencies listed above will at least provide some good news for those planning a much-needed trip this year, even if it is on a tighter budget.

Jonathan Merry adds, “Don’t forget that how you exchange your money is just as important when looking to make your pound go further abroad this year. We created MoneyTransfers.com so travellers can access real-time data on the best way to send money abroad, wherever you’re going.

What happens if the pound weakens against the euro?

How does a weak pound impact your investments? – A weak pound could mean different things to different investors, so it isn’t always easy to say exactly how the value of the pound will impact your investments — it depends on what you have invested in.

1. When the pound loses value, it means that international businesses can afford to buy British products and services for less, making it more attractive to buy British goods and services.
2. When foreign investments rush into the UK, this can fuel a quick recovery in the pound’s value.
3. So, if you have invested in a company that exports internationally, or is planning to, your business may become more valuable thanks to the drop in the pound.

On the flipside, a weak pound can be damaging for companies that import goods from abroad and for those with supply chains around the world. A weaker pound can also push inflation higher as the UK imports more than it exports, meaning that the cost of producing goods gets more expensive.

Will the pound get stronger in 2024?

Pound To Dollar Forecast: 1.26 By April 2024, Recover To 1.29 By 2025 Say Wells Fargo Foreign exchange strategists at Wells Fargo predict a weaker British currency in their medium-term outlook, with the Pound Sterling (GBP) tipped to fall to $1.26 against the US Dollar (USD) by Q1 2024 (April 2024). The analysts then forecast a recovery to $1.29 by the start of 2025.

Considering the current Pound to Dollar exchange rate (GBP/USD) of 1.2734 as of 19/8/2023, this equates to a near 1% decline from today’s levels, with a subsequent recovery of around 2.3% if the end-of-year predictions materialise. “U.K. Q2 GDP was surprisingly resilient, showing moderate growth of 0.2% quarter-over-quarter, including gains in both consumer spending and business investment,” says Nick Bennenbroek, International Economist at Wells Fargo.

But optimism from recent figures may not necessarily project into the future. “Going forward, however, our view remains for slower U.K. growth and, eventually, a mild U.K. recession,” he adds. The strategist underlines potential challenges for the U.K.’s economic outlook, attributing them to “real household income dynamics and rising interest rates” which could affect consumer activity.

He also highlights the softening sentiment surveys indicating a more measured pace of growth ahead. As Bennenbroek delves into the monetary policy landscape, wage and inflation trends emerge as central themes. “Given subpar growth, wage and price trends should remain the key driver for the path of U.K.

monetary policy,” he states. With recent figures indicating an accelerated wage pattern and a sustained core inflation, the analyst predicts a consequential adjustment in monetary measures. “With the latest figures showing a further acceleration of wages, and core inflation remaining elevated, we expect 25 bps rate hikes in both September and November, for a peak policy rate of 5.75%,” he adds.

A pivotal element in Bennenbroek’s forecast revolves around the divergence between market predictions and the anticipated policy moves by the Bank of England. “Beyond November, we believe economic activity will slow sufficiently, sentiment soften, and wage and inflation trends finally start to show more convincing improvement, for the Bank of England to pause,” he points out. This potential deceleration in policy tightening could present a nuanced landscape for currency investors, especially given the underlying economic indicators.Yet, the overarching sentiment from Wells Fargo’s economist appears cautious regarding the Pound Sterling (GBP)’s performance in the medium term.

Referring to the potentially challenging combination of low growth, elevated inflation, and high interest rates, Bennenbroek remarks, “we do not view as particularly favourable for the U.K. currency.” Such an environment, he believes, positions the Pound Sterling (GBP) as a potential underperformer in the coming months.

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: Pound To Dollar Forecast: 1.26 By April 2024, Recover To 1.29 By 2025 Say Wells Fargo

Why is euro going up against dollar?

Why did the euro rise? – The euro’s rise in recent months has a lot to do with a milder winter in Europe. Warmer than normal weather, aided by an impressive effort in cutting gas consumption, has not only eased concerns around blackouts and energy rationing but also reined in natural gas prices.

1. The better-than-expected energy situation has brightened the prospects for the region’s industries, suggesting that the eurozone may avoid a recession.
2. The eurozone posted a surprise growth in output in the fourth quarter of 2022.
3. The common currency is also being propped up by the ECB’s hawkish stance.

The central bank continues to aggressively hike rates to arrest inflation, which remains stubbornly high, even as its peers like the US Fed slow down a bit. “As interest rates in Europe rise faster than in the US, it benefits the euro and attracts capital inflows from elsewhere into the eurozone,” Carsten Brzeski, chief economist for Germany and Austria at ING, told DW. The European Central Bank plans to continue raising interest rates to fight eurozone inflation Image: KAI PFAFFENBACH/REUTERS

What is the euro to pound rate in 2023?

This is the Euro (EUR) to British Pound (GBP) exchange rate history data page for the year of 2023, covering 251 days of EUR GBP historical data. Best exchange rate: 0.8969 GBP on 04 Feb 2023. Average exchange rate in 2023: 0.872 GBP. Worst exchange rate: 0.8514 GBP on 11 Jul 2023.