Euro exchange rate soars to three and a half year high

The Momentum UK Team 25 July 2012

British holidaymakers jetting off to Europe this Summer may have picked the right time to go as pound reaches its highest point against Euro in nearly four years, according to Association of British Travel Agents (ABTA).

The pound is currently worth €1.28 - the highest rate against Sterling since 2008 and an 11.5% increase of value of the Euro since last year.

The pound has seen a boost as some investors choose to put their money into UK government bonds as these are deemed safer than many euro zone assets.

This is likely to come as good news for the two million Brits setting off on their holidays over the weekend following the start of the school holidays.

In family favourite destination Spain, a round of drinks for the family is likely to leave holidaymakers with change from a ‘tenner’ with the average beer costing just £1.55 (€1.99) and soft drinks for the kids even cheaper.

Worries about the effect that the Eurozone debt would have on tourism have led to many bars and eateries in popular destinations slashing their prices and offering money-saving promotions to boost business further.

Mark Tanzer, ABTA chief executive said:

“Eurozone destinations are proving popular with holidaymakers looking to take advantage of the pound's strengthening against the euro, coupled with the fact that many bars and restaurants have lowered their prices.”

In spite of this positive news for the pound, the problems of the Eurozone continue and as unemployment and debt grow rapidly in Spain, concerns are rising that they will soon have no option but to ask for a full ‘bail-out’.

Richard Dyer, currency strategist at Caxton FX commented:

“The market is more focused on the euro zone than it ever has been and that benefits sterling.

“The pound can seemingly weather any weak data that is thrown at it.”