Pound steady against the Euro as Brexit arrives but what will future hold?
The pound to euro has remained steady this afternoon with just hours to go until the UK exits the European Union but the coming 12 months could see yet more wild fluctuations in the currency exchange rate.
The exchange rate is a vital component when it comes to the fortunes of businesses operating on and around the border region, and indeed across Ireland and beyond, and as of the morning of the Brexit date, January 31st, 2020, £1 sterling is trading at just over €1.19 euro.
The pound has remained relatively strong due to a decision by the Bank of England not to cut interest rates in the UK this month.
While this may seem good for those paid in sterling and travellers to Europe, or indeed businesses buying in goods and services with sterling (given how low the pound has plummeted at times over recent years), roll back to the Referendum on leaving the European Union back in June 2016 and it doesn’t look like such a good rate at all.
After the shock announcement that the UK had voted by a slim majority to leave the EU, the value of the pound plummeted by over 10 per cent within two weeks from over €1.30 to around €1.16.
By October 2016 it had dropped to €1.10, but there was worse till to come for the pound as the euro gained strength and a succession of announcements from Westminster shook confidence in sterling, although to date it has not plummeted to the 2008 pre-financial crash all time lows of around €1.02.
Conversely, the weaker pound has meant more bang for your buck for cross-border shoppers from the Republic, and for businesses in the north of Ireland, particularly those along the border in places like Derry, and the healthy cross-border consumer traffic has been a relief of sorts during often difficult trading spells.
It will be interesting to see how the markets react over the coming weeks and indeed the coming year, and indeed whether the seismic divorce will have a major effect on either currency.
How the trade negotiations between the UK and the European Union go, and indeed whether there will be a trade deal at all, will be crucial in dictating how the exchange rate goes. We can expect more fluctuations as announcements are made, speculation mounts and the markets read the mood music between the two negotiating teams. Any parallel discussions with other countries will also be crucial.
So there is more uncertainty over the year ahead and most likely beyond 2020.
The global pre-financial crash times when a pound sterling back in 2007 netted you over €1.40 now seem like a distant memory....