Beleaguered holidaymakers have cause for celebration after the euro was pushed even lower against the pound.

During trading yesterday the euro fell to 91p against the pound, compared to the near parity of 98p achieved at the end of the year.

It is the lowest level the euro has sank to against the pound since mid December.

Neil Parker, manager, Global Treasury Service, First Trust Bank said: “The single currency sank to its lowest level against the pound since mid December yesterday as dismal Eurozone inflation data left the door open for an imminent interest rate cut from the European Central Bank.”

Mr Parker also believes that the pound will continue to gain on the euro, which means holidaymakers destined for the eurozone will receive more euros for their pound. It will also be a welcome boost for local businesses trading in Europe.

He said: “The euro's recent ascent is starting to look more unstable, and the volatility is likely to continue, with the pound hopefully making up lost ground. This will be welcome news for companies currently embarking on a new trading year and trying to estimate costs for any supplies coming in from the eurozone. Should the exchange start to move back, this will be welcome news for local businesses and holiday makers heading off to Europe in 2009.”

In the last 12 months sterling has fallen by 23%, which has restricted consumers’ ability to achieve value for money on foreign holidays.

Ulster Bank economist Richard Ramsey forecasts that the euro will slump to 80p by the end of the year.

Mr Ramsey said: “Since the start of the week, the euro has weakened further against sterling as it looks increasingly likely that the ECB will cut interest rates next week. The euro is expected to weaken further in the months ahead, as the ECB plays catch-up with the Bank of England on the interest rate cutting front. While we expect euro/sterling to go sub-80p towards the end of the year.”

However, he believes shoppers and tourists from the Eurozone will not be put off coming to Northern Ireland, particularly the border towns of Newry, Enniskillen and Londonderry, as the exchange rates fluctuate.

Speaking on the prospects of sterling rallying against the euro, Northern Bank chief economist Angela McGowan said: “We’ve seen the pound gaining lost ground against the euro over the last number of days. This is mainly due to the fact that foreign exchange markets are recognising that the Eurozone economy is experiencing increasing recessionary pressures.

“In the short term sterling will remain weak and will only gain strength when the UK Government puts forward clear economic plans for the year ahead.

“Such plans should present a range of measures designed to jump-start the credit markets and reassure investors that the UK economy will see some level of recovery towards the end of 2009.”