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Cheap summer getaways as value of pound rises against euro

Published 17/07/2015

Bank of England governor Mark Carney has spoken about when interest rates may rise
Bank of England governor Mark Carney has spoken about when interest rates may rise

British holidaymakers will enjoy the cheapest summer getaways in Europe for years after the value of the pound rose "remarkably" against the euro.

Sterling rose to just under 1.44 euros, meaning that travellers who set out after many schools break up for the summer today will be able to exchange £500 for 696 euros - 132 more than two years ago.

It is the pound's highest level since November 2007 and up 15% compared with this time last year, with analysts predicting that it could soar to 1.5 euros.

Experts said it may spell the end of summer "staycations" following the recession and lead to an increase in overseas trips.

Guy Anker, managing editor of MoneySavingExpert.com, said: "It is undoubtedly, in a pure financial sense, one of the best times ever to go across to Europe since the euro has existed.

"In December 2008 the pound was close to parity with the euro and at that stage some of the worst bureaux de change were offering less than a pound.

"It wasn't the norm but that's how bad it got and it is a remarkable turnaround."

Andrew Brown, of Post Office Travel Money, said it was "great news" for anyone going abroad.

"In the last couple of years we have already seen a really steady rise in overseas travel," he said.

"With this big jump in the relative value of sterling versus the euro we would expect to see even more people going abroad.

"It just tips that balance, making it cheaper to go abroad than it is to stay in Britain."

The pound strengthened against the euro as the fall-out from the Greek debt crisis means the European Central Bank is seen as unlikely to curtail its monetary support for the single currency any time soon.

Its policy of creating billions of euros to purchase assets weakens the currency at a time when the US dollar and the pound are looking stronger as American and UK central banks weigh up the prospects of an interest rate hike.

Bank of England governor Mark Carney's remarks last night on the timing of a hike - that a decision was "likely to come into sharper relief around the turn of this year" - will only have bolstered sterling further.

A rise in rates, which have been at the historic low of 0.5% for more than six years, had previously not been expected until the middle of 2016.

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