Euros are better value right now (Image: Nataliia Samoilova via Getty Images)
Sterling has reached a 10-month peak against the Euro today as specialists advised Britons to “buy your holiday money now”. The Pound touched €1.162 on Wednesday morning – the strongest position it has occupied since August 2025.
Specialists said British travellers, importers and foreign property purchasers will receive a welcome enhancement in purchasing power. They said investors are progressively preferring the UK currency amid expectations that interest rates will stay elevated in Britain compared to the Eurozone.
They also said the surge had been fuelled by higher UK bond yields and a broader interest-rate gap between the Bank of England and the European Central Bank (ECB). This has rendered Sterling more appealing to international investors, while softer economic momentum and declining inflation pressures throughout the Eurozone have pressured the currency.
Markets have also responded favourably to a more stable political environment following the recent US-Iran peace agreement. Prem Raja, head of trading floor at Currencies 4 You, said Britons could benefit from the additional purchasing power in Europe.
He added: “Buy your holiday money now. The Pound is having one of its strongest periods against the Euro in almost a year. Holidaymakers, overseas property buyers and importers are the big winners as their money goes further abroad.
Paul Denley (Image: Paul Denley/Newspage)
“The question now is whether it lasts. While the recent move has been driven by stronger UK data and a weaker Euro, currency markets remain vulnerable to economic surprises and geopolitical developments. For now, Sterling holders will be enjoying the extra spending power.”
Tony Redondo, founder at Newquay-based Cosmos Currency Exchange, said the markets were giving Andy Burnham, the expected new Prime Minister and replacement for Keir Starmer, the benefit of the doubt.
He added: “As ever in currency markets, value is relative. On the Pound side, elevated UK bond yields remain a key driver while the carry trade still matters: the 10-year gilt yield sits 63% above the German Bund and 29% above the French equivalent, drawing capital into the Pound versus the Euro provided global sentiment stays constructive, currently helped by the US-Iran peace accord.
“Markets also seem willing to give Andy Burnham the benefit of the doubt or have simply priced in the ‘least-bad’ outcome. On the Euro side, yesterday’s Eurozone PMI showed inflationary pressures easing sharply in June, reducing expectations of further ECB hikes and weighing on the single currency.
“Still, it’s early days in the UK’s transition, with key risks ahead including a leadership contest or coronation, a snap election, and the next Chancellor’s identity. Winners: UK businesses importing from the EU, British holidaymakers heading to the Med, and anyone buying property on the continent.”
Tony Redondo (Image: Tony Redondo/Newspage)
Paul Denley, CEO at London-based Oakham Wealth Management, said businesses that exported to Europe would lose out.
He added: “Sterling’s strength reflects several converging forces. The Bank of England’s policy rate sits around 150 basis points above the ECB’s, making Sterling attractive to yield-hungry investors. UK data has also held up better than expected, while the Euro has faced its own headwinds from softer growth and a stronger dollar.
“Whether it lasts is another question. Exchange rates are notoriously difficult to forecast and this move has been driven as much by shifting expectations as fundamentals. If the rate gap narrows, that tailwind fades. Context matters too: Sterling was trading higher against the euro a year ago.
“Winners include holidaymakers, importers and businesses buying overseas. Losers include exporters, overseas earners, and UK investors with global exposure, whose foreign assets translate back into fewer pounds.”
Nouran Moustafa, practice principal and IFA at Roxton Wealth, cautioned that a single misstep from the incoming government could swiftly reverse any progress made.
She added: “Sterling is rising for two reasons: markets are pricing in a calmer UK political handover, and the Euro is weakening as investors expect the ECB to be less hawkish than the Bank of England. The Pound has not suddenly been given a vote of confidence.
“It is a relative trade. Investors are looking at a possible pro-business, fiscally disciplined team in Westminster and comparing that with softer Eurozone momentum. Will it last? Only if the next government makes the numbers add up. Any sign of unfunded spending, higher borrowing or a messy leadership process could reverse it quickly.
“The winners are British holidaymakers, importers and anyone buying in Euros. The losers are UK exporters, businesses paid in Euros and overseas visitors, because Britain becomes more expensive. A strong Pound feels good at the airport; it is less helpful if it starts hurting competitiveness.”
This story originally appeared on Express.co.uk
