Maybe it’s time for Britons to take a break from Brexit and head somewhere in southern Europe to enjoy some warm spring weather.
The rising odds of a delay in the U.K.’s exit from the European Union has seen the pound rally to the strongest level versus the euro since 2017. And that’s bringing some much-needed cheer for U.K. holidaymakers who have seen their spending power eroded by the currency’s tumble since the Brexit vote.
While sterling is still more than 10 percent weaker than pre-referendum levels, it has gained ground in recent days as signs of a change in London’s Brexit strategy raised hopes that a no-deal outcome will be avoided. Prime Minister Theresa May is set to make a statement to Parliament Tuesday, amid reports she will allow her Cabinet to discuss a delay if no pact is reached next month.
“I’m going away in a couple of weeks so I’m absolutely delighted,” said Phil McHugh, a trader at Currencies Direct Ltd., who plans to travel to the continent to attend a bachelor party. “This move will offer a good boost to holidaymakers and also there is more optimism backing up the pound now.’’
Still, some potential holidaymakers could be put off by reports that Britons traveling abroad may face delays of up to five hours in the event of a no-deal Brexit. Britain is set to leave the European Union on March 29, with no-deal remaining the default option.
Sterling rallied as much as 1 percent Tuesday to 85.88 pence per euro, the strongest level since May 2017. Against the dollar, it climbed above $1.32 for the first time since Jan. 28.
“A decent deal will see sterling get a little stronger, back above 83 pence per euro, and ditching the whole thing is even better for our tourists,” said Kit Juckes, a strategist at Societe Generale SA. “If we get a decent deal, the benefit won’t just be for Brits in Provence, but for anyone heading further afield.”
©2019 Bloomberg L.P.