As the European Central Bank rolls out Quantitative Easing [QE] the Euro has plummeted against sterling making it cheaper for UK residents to go abroad and more expensive for continental Europeans to come here.
This time last year the pound was worth €1.18. Today is trading at €1.40. This means that £500 will buy €700; that’s €110 more than 12 months ago and the Euro shows no signs of strengthening dramatically any time soon.
The double whammy of a cheap Europe attracting more people to go on foreign holidays and an expensive UK putting off visitors could bode ill for our summer influx of Europeans from France, Germany, Italy and Spain. Furthermore, continuing weakness in the economies in France, Spain and Italy are an added obstacle.
The euro is also likely to fall to an equal footing with the dollar by the summer as the dollar stages a broad rally on the back of interest rate rise expectations. This means that continental Europe will be cheaper for American visitors that may chose to bypass the UK if the recent strong sterling rate, which has not offered any bargains to American visitors, continues into the summer.
If the current spring weather is any guide we could be looking at a cracking ‘barbeque’ summer but it might not bode well for retail and hospitality sectors.
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