LONDON — British holidaymakers jetting off to Europe who haven’t yet changed their money face misery, with the pound at a seven year low against the euro.
The pound dropped to its lowest level since 2010 on Wednesday — excluding a very brief period during last October’s flash crash — as the strengthening single currency punishes the pound.
The euro/pound currency cross, which is generally how the two are measured against one another, briefly rose to £0.9141 during early trade on Wednesday. That marked the strongest the euro has been against the pound, bar the flash crash, since 2010. That rally was quashed by the worst of the Eurozone debt crisis, which pushed the euro downwards.
The chart below illustrates the euro’s recent rise against sterling:
The euro has been on a tear against both the pound and the dollar so far in 2017, as investors take note of the improving fortunes of the bloc’s economy. EU growth has recovered to its best levels since the eurozone debt crisis.
Meanwhile, the pound remains subdued thanks to British economic weakness and the uncertainty surrounding Brexit negotiations, both of which are expected to continue to negatively impact sterling.
Late last week analysts at Morgan Stanley forecast that the euro will be worth more than Britain’s currency by the end of the first quarter of 2018.
In the bank’s FX Overview paper at the end of last week, a team led by strategist Hans W. Redeker said that a combination of a stronger euro and a weakening pound will combine to make the euro more valuable than the pound for the first time in its history, and make it — in terms of pure value — the strongest major currency on the planet.