Sorry, holidaymakers: Sterling hits three-year low against euro
Sterling has plummeted to a three-year low against the euro today ahead of a big week of post-referendum data.
The pound slipped a further 0.5 per cent in the first hours of the week, standing at €1.1517 at lunchtime – its lowest level since August 2013. The €1.15 mark is thought to be a crucial psychological barrier for the currency as traders turned their attention to just how low the pound could go.
Sterling was also below $1.29 against the dollar, its lowest intra-day level since early July. If the afternoon session doesn't prove favourable to the pound it could, yet again, set a new 31-year low at the close.
Sterling has fallen by around 14 per cent against a basket of currencies since the referendum, and a report by the AA this morning showed as many as one in 14 people have ditched plans to travel overseas this summer as a result of the slide
The depreciation of the pound was given a helping hand earlier this month after the Bank of England unleashed a larger-than-expected stimulus, sending the currency crashing and driving bond yields lower.
Alexandra Russell-Oliver of Caxton FX said: "An already weak sterling has faced additional woes recently due to increased stimulus measures and disappointing data from the UK."
Tomorrow, the first post-referendum inflation figures will be released for the UK economy. It is expected to be one of the last months where the rate holds steady. Typically, higher inflation increases the prospect of an interest rate rise and pushes the pound higher. But even with economists across the board predicting prices to rise over the rest of the year, the Bank of England has already said it cares little about a short-term jump in inflation and analysts expect the promise of yet looser monetary policy to keep the pound under pressure.