How low will the pound fall against the euro?
Written by Karen BryanI must say I’ve been surprised by the recent fall in the value of the UK pound against the Euro. At the beginning of December 2008 the exchange rate was 1.2 euro to the UK pound. Now one month later, at the beginning of January 2009, the rate is standing around 1 euro to 1 pound.
by irene
It makes me wonder how much further sterling will fall against the euro? Personally I believe that the pound will rise modestly against the euro within the next few months, although I don’t see the pound buying anything like 1.5 euro again soon. I don’t think that the Euroland economies are much better placed than the UK to weather the current economic storm, so at present the euro seems overvalued.
We were thinking of a trip to Italy in May 2009 but the low value of the pound has put us off. Is the pound euro exchange rate affecting your holiday plans for visiting Europe in 2009?
Update 19/04/2009
My prediction has been fairly accurate with he UK pound standing at 1.13 euro on 19 April 2009, compared to virtual parity at the start of January 2009.
I LOVE the low pound. I’m Canadian, going to school in London and was getting KILLED by the exchange rate. This 1.77 pound (in Canadian dollars) is the best thing that happened to my pocketbook.
Diana, well as ever there are winners and losers in any exchange rates changes.
I must say I love tha fall as well…going to Britain was always sooo expensive. Now I can finally enjoy the country I fell in love with without the outragous prices (I’m from the euro zone).
Katja, yes I think that the fall of pound makes the UK great value for visitors from the Euro Zone.
I feel your pain. The Canadian dollar seems to be a yo yo these days. Not good for making travel plans.
[...] Europe a la Carte Blog Online interactive travel magazine about authentic travel in Europe on a modest budget « How low will the pound fall against the euro? [...]
I’m doing my final year now and am going to look for a job here in the UK
obviously the fall wouldn’t be a good news for me…
because previously my parents had been changing for my tuition fee using the higher rate,
and now I’m going to start working, it drops! :( :(
I wonder how far it’s going to drop too..
2 weeks ago my friends and I went to Austria for a one week skiing trip..
yea, I realized how terrible the rate is.. :( :(
2 years ago when we went to italy and france, it was something like 1 to 1.45
beginning of this year was 1 to 1.25
then now, about the same.. i hope it rises soon …
huibee, thanks for your comment, One of my friends was in Austria last Summer, before the pound dropped in value and she found Austria very expensive even then.
[...] if last week I had put money on my own prediction tha the value of the pound would soon increase against the euro I could have made a tidy profit as the UK pound has increased by around 10% in value over the last [...]
We are in the rental business of luxury villas in the Algarve Portugal. What we see is that in the very top segment, the 10.000 euros a week we see very little change. It is only in the lower market where the drop has a large impact
Reinier, perhaps the luxury market is more ummune to fluctuations like this. However I do think that the effects of the credit crunch e,g, loss of bonuses, reduction in investment income may affect even the luxury market.
The Euro will not stay at its current value for much longer its to cheap and the speculators on the Forex futures and spreads will be buying and this will push the price back up. I keep an eye on the exchange rate at http://www.poundtoeuro.com its a free site with upto date info and a great little calculator for exchange rates
as at 21 January 2009, the pound is continuimg to fall against both dollar and Euro, and other currencies. with the massive risks underwritten by the UK Government for the UK Banking sector, if these measures fail to solve the problem, then UK plc is in freefall, with no emergency bailout.
As for the Eurozone, they may also be in recession, but will be in pole position to recover much more quickly than UK, who will still b e struggling in 5 years time, even if the Banking sector and property markets recover.
However, taxes will have to be the highest in Europe to pay for the huge costs of financial and social disasters. Where does that leave UK plc in the recovery stakes ?
Robert, thanks for your comments Why do you think that the Eurozone will recover more quickly than the UK? I agree that the only way to recoup all this cash injection into the UK economy and banks will be to increase taxes but I thought that many other countries had similar strategies in place.
Hi Karen. As you have probably seen on the News almost every day, while the problems of the pound sterling are compounded by the huge debt the UK is left with, there iis also the problem of the rapid decline of the UK manufacturing base, which although these factories are able to sell more cheaply to the Eurozone, the cost of raw materials and transport is increasing considerably. I know of one UK retailer that imports from Germany and his prices are increasing by 30%, so if his sales fail , the result is inevitable.
In the Eurozone, apart from Spain, Ireland and Portugal the national debt is nothing like as high as Uk so far, but watchout for the new east european members, I sense trouble ahead rather similar to those in Greece last year, and those problems could put a huge strain on the whole EU economies, in addition to the social consequencies.
Thanks for your reply, Robert. Yes I did read in last few days that the credit ratings of Spain and Ireland been downgraded and that Italy was on the watch list, do you think that UK will suffer that fate soon?
I suppose that civil unrest is more likely during harsh economic times. I hope that won’t be a widespread occurence.
Well the outlook for the pound isn’t looking very rosey but I’m not convinced that the euro will fare significantly better.
Karen, I do think there is going to be a big battle btween the main Eurozone economies like France, Germany and Holland (manufacturing centres) and a weakening but maybe resilient UK. I have always thought that this is being even now played out as a legacy of two world wars and a now vanished British Empire. Britain (more specifically England) has still not yet come to terms with being relegated to second division, and this rankles our Government and Parliament as a whole. We dont at the moment have any inspired leaders to look up to and who command a presence on the world stage. When and until this happens, the likes of Angela Merkel and Nicholas Sarkozy will dominate the European arena, and other countries will increasingly ignore Britain altogether, if they are not already doing so. I think UK will have to start looking at its image, and re-invent itself with a vital role to play. any suggestions to NO. 10. !
Much of the bad news is out in the UK – and it’s pretty dreadful hence the slide in the pound. However, there is very bad news to come in some of southern and eastern EU countries, which will inevitably drag the Euro down as well. Yes there will be higher taxation to come in the UK, however, taxation levels in the rest of the EU are actually already much higher (in spite of what UK people believe), and VAT is also at a higher rate than the UK.
The fall of Sterling is bad news for everyone in the Eurozone. If it continues the British Government will have to look at its position in the Eu. Britain and Germany are the two biggest contributors to the the EU finances. Beleive it or not Britain contributes her mammoth share in Euros. As a result of the poor exchange rate, Britain is now haemorrhaging money to the Brussels machine at an alarming rate. If this continues Britain will have to seriously consider leaving, before the EU bankrupts this once great country. Then watch the Brussels machine and the Euro disappear down the drain. This is a very serious possibilty!
Hi Sue and Richard. Thanks for your comments, and I agree things are not looking atall good for UK at present.(even George Soros continues to downgrade Sterling). However may be things will start to change later this year, and I think many companies and businesses will have to diversify, and it maybe that from these new areas that some recovery will start to take place, slowly at first but gathering place as confidence hopefully returns in 2010 and onwards.
As for the Euro, it is true there are some ominous cracks appearing, and UK will probably reconsider its position in the EU under the Conservatives, if they win the next Election. that could however take a few years to opt-out of completely, and might even cause other countries to follow suit. We shall see ! Robert
Just an addendum to previous my posting, for those interested who would like to sample the tourist offices and agencies around the world under one roof, next week from the 5th February to the 8th, there is the “Destinations 2009″ Travel Show at Earls Court/London, and at the end of February at NEC/Birmingham. at both venues it may be possible to get some idea of the value of the pound in respect of travel costs, dining and excursions etc. any feedback from anyone going to the Travel Exhibition, would be interesting.
Robert
Hi Robert, thanks for your reply. I agree with you the decision to stay in the EU will probably be down to the next Government. This looks likely to be a Conservative one, led by David Cameron. The Conservatives are the most likely of the three main Parties to do it. Some people may see this as a huge risk, but as things stand at present I think it would be a risk worth taking. Switzerland and Norway seem to get along okay outside the EU, and have negotiated trade agreements with Brussels. Why can’t we?
Lets go shopping to Uk, everything is so cheap overthere? Pound is going down and down, hahaha
Manuel – Get on the first Flight to London from Madrid. The shop keepers in London would love your money and so will the Hacienda(Taxman). Enjoy it while it lasts, because you could be back to the Pesata sooner than you think!
did anyone see the comment in the Telegraph yesterday (feb 17) about the theat to the Euro from the new Eastern European states ?. If the comment is correct, the bubble may soon be about to burst, possibly before the G7 conference in London this coming April ?
[...] thinking of a trip to Italy in May but between the high prices for things such as car hire and the low value of the UK pound against the Euro we decided against [...]
The value of Property in the UK must have become doubley attractive to Euro Zone residents. Our prices have crashed and so has the value of our currency.
I want to buy a house in Germany and the option has recently got £100,000 worse. What justification – or are the UK gov really that bad that or currency is shot?
Nigel – property in Europe is now much more expensive for UK residents. It was certainly one of the factors that made us recently decide not to purchase a Place in the Sun in Spain.
To all those waiting for the pound to rise against the Euro, sadly this is not going to happen for many months (even years). please see Evening Standard comment in Wednesday 30 September by Anthony Hilton on page 33, who if I read correctly ,says that the Bank of England Monetary policy and the Chancellor is to let thye pound fall to gain export competiveness. Is this a wise route to be taking when billions are owed on the National Debt. Any solutions please
Robert – sterling has fallen again against the euro. Bad news for travellers to Euroland, like me. I’mm off to Dublin next week.
As it seems possible that there may be e Referendum in the Uk, if the Conservatives win the next election in 2010, and even though the Lisbon Treaty is going to ratified now that the Irish have said yes, the onservatives will still go through the motions of a referendum, and if more than 60% decide both against continued EU membership and never adopting the Euro, I think the road will be clear for the UK to leave the EU, but with some severe penalties
involved, namely the exodus of many EU businesses from UK, and a big dip in our exports to the EU, aswell as EU imports becoming much more expensive, notably our energy costs, which depend on imported fuel sources. Is David Cameron prepared to take all this on board before deciding the final outcome ?????