Brexit uncertainty has sparked worry among holidaymakers prior to the UK’s departure from the EU, but the after-effects on the exchange rate could see the pound crash in one particular circumstance.
Finance experts have spoken out on the very real potential of a no deal Brexit for the UK, and noted the pound could “break” as a result.
Prime Minister Theresa May is today in Brussels to try to thrash out her Brexit divorce deal in hope the EU will re-open negotiations on her Withdrawal Agreement.
Yet, should she not be successful and the UK leaves the EU with no concrete plans on how to go forward own a post-EU environment, a no deal scenario will ensue.
Ian Strafford-Taylor, CEO of currency expert, FairFX, has contemplated just what will happen to the pound in the event of no deal.
He said: “Nothing is certain, but if the UK crashes out of the EU with no deal, the pound could fall across the board.
“In terms of what that looks for exchange rates, we could see the pound break well below 1.10 against the euro, and head towards the low 1.20s against the US dollar.”
He added: “There is still a lack of clarity over how Brexit will play out.
“With multiple options still on the table the UK still faces a lot of uncertainty over exactly how it will leave the EU.
“Uncertainty is, without a doubt, one of the biggest causes of volatility for currency.”
“The pound is yet to return to pre-Brexit rates against the euro, and today it’s down 13 per cent against euro compared to the day of the referendum.
“That means holidaymakers heading to Eurozone destinations are now getting £147 worth of euros less for every £1,000 they exchange.
“Whenever there is a parliamentary vote or update on the UK’s negotiations with the EU, we see a spike in support requests as customers try to understand what the latest developments mean for the value of the pound.
“There’s been a significant increase in the number of queries from new and existing customers about the impact of Brexit and what it means for their business and personal international payments as well as their travel money.
“Brexit is an unprecedented event so it’s no wonder there is heightened anxiety around the consequences it may or not have.”
Meanwhile, the potential for a no deal Brexit has impacted passports.
It now means holidaymakers may need to have more than 15 months valid on their passport before they travel.
Last year, the passport office issued information about the changing requirements for entry to Schengen states.
The advice said that you should have at least six months left on your passport before you travel, with millions of UK passports now under threat of becoming invalid.