Pound strengthens against the dollar and euro on Brexit day
THE pound has strengthened in value against the dollar and the euro as the UK prepares to leave the European Union.
The historical event of Brexit is taking place at 11pm tonight and we will then enter the so-called transition period until December 2020.
Read our Brexit day live blog for all the latest news and updates
By 5pm on Friday the pound was up about 0.41 per cent against the euro and 0.74 per cent against the dollar.
At the time of writing, £1 would buy you about €1.19 and $1.31.
But even though it's a big political event, financial experts said they don't expect Brexit to have any impact on the exchange rate tonight.
That's because Brexit has been "fully priced in" and the markets have been building up to this moment for three years.
Michael Brown, currency expert at international payments and foreign exchange firm Caxton FX told The Sun: "The pound gained quite a lot of ground yesterday after the Bank of England left rates unchanged.
"It indicated that it is prepared to wait and see if the bounce in the economy we saw lately will continue.
"The UK leaving the EU is the biggest event on the calendar today but I can't see it having any effect on the currency exchange.
"The departure has been fully priced in since the December election."
Nigel Green, CEO of financial advisory organisation deVere Group, agreed: "The markets have fully priced-in Brexit day and the pound will, therefore not be immediately impacted at the moment the UK officially leaves the EU.
"That said, we can expect some volatility throughout the next 11-month transition period as we move into unchartered territory.”
How to get the best holiday money rate
WE spoke with Hannah Maundrell, editor-in-chief at money.co.uk to find out how you can guarantee the best rate when you go on holiday
- Don’t buy cash at the airport – you’ll always be able to beat the rate with a bit of forward planning
- Compare travel money companies online – Factor in delivery costs and choose the option that gives you the most cash to spend on holiday. If you’ve left it until the last minute order online for airport collection so you get the best of both worlds.
- Use comparison tools – MoneySavingExpert’s TravelMoneyMax enables you to compare pick-up and pre-order rates.
- Don’t pay for travel money with a credit card – it’s likely you’ll be charged a cash withdrawal fee which adds to the cost.
- Top up a prepaid card to lock in your rate now – Choose your card and read the T&Cs carefully as some apply hefty fees. WeSwap, FairFX and Caxton FX are all worth checking out.
- Always choose to pay in the local currency rather than sterling – This will help you avoid sneaky exchange fees
Ian Strafford-Taylor, of international money specialist Equals, added that the pound will remain "vulnerable" in months to come.
He said: "In less than a week we’ll be entering unchartered territory for the pound which leaves it vulnerable to further turbulence against the euro and other currencies and makes it difficult to predict exactly what will happen next.”
“There is a lot of work for the pound to do to reach pre-referendum heights but whether or not it’s able to regain those rates depends largely on the trade deals the UK strikes with other countries after leaving the EU on Friday.”
In comparison to pre-referendum levels in June 2016, Brits could then get $1.588 or €1.4271 for £1.
Overall, the pound ended last year roughly 2 per cent higher against the dollar.
More Money news
There are many factors that can affect the value of the pound, particularly decisions surrounding Brexit.
MoneySavingExpert Martin Lewis' top advice is to stop worrying about your holiday funds and look for the best rate on the day that you spend.
Read our predictions on what will happen to the pound after Brexit and whether you should buy euros now.
You can also check out our ultimate Brexit guide and find out what it means for summer holidays, passports and Brits living abroad,