Although today is a busy day within the financial calendar, an expert warned that this does not mean that investors should expect “significant volatility” from the exchange rate.
Sterling has been steadily increasing over the past couple of days, making its way gradually towards the 1.16 mark against the euro.
The pound is currently trading at a rate of 1.1581 at the time of writing, according to Bloomberg.
This is slightly higher than yesterday’s rate at the same time, which saw the pound trade at the 1.1573 mark.
Some experts do not expect much movement from the exchange rate today, despite the fact that the Bank of England’s Monetary Policy Committee is getting together for one of its annual meetings.
One of these experts is Michael Brown, currency expert at Caxton FX, who spoke exclusively with Express.co.uk about today’s exchange rate.
He explained: “Sterling spent much of yesterday consolidating its recent advance to just shy of the €1.16 mark, with Wednesday being another day marked by little news, and little data.
“Today, though, should be different, with both a BoE decision and a huge slate of local and regional elections for investors to get their teeth into.
“Despite that, derivatives imply that we should hardly be braced for significant volatility ahead.”
However, George Vessey, UK Currency Strategist at Western Union Business Solutions, said yesterday that the pound could increase in the coming days.
He commented: “The British Pound could rally higher this week if the Bank of England signals it is ready to start reducing its bond buying programme at its monetary policy announcement tomorrow.
“The central bank will also provide updated growth and inflation forecasts – both of which are expected to be revised higher, which again could support GBP demand.”
But Mr Vessey warned that today’s local elections could impact negatively on the pound if there is clear support for Scottish independence.
He said yesterday: “The Scottish Parliament election also takes place tomorrow though, which may limit sterling’s potential upside in the short term if pro-independence parties gain a substantial majority.
“Back in 2014, when the last Scottish independence referendum took place, sterling slumped around six cents in the month of the vote, but in the build-up prior – the political risk was largely ignored. For this reason, upside risks might indeed outweigh downside risks in the short term for the pound.”
Mr Vessey added: “Sterling is rebounding against the euro this month following its first monthly decline in seven months.
“GBP/EUR is lining up for a very strong weekly appreciation after basing just under the €1.15 mark for the past three weeks. Is €1.17-€1.18 on the cards again in May?
“The euro had a strong April thanks to Europe’s vaccination campaign speeding up and the economic horizon appearing more promising thanks to businesses and consumers adapting to lockdown measures.
“GBP/EUR could trend back towards the €1.17 mark if the growth rate differential between the UK and Europe widens.
“The UK’s easing of restrictions remains on track and UK growth forecasts are widely being upgraded, which is supporting sterling’s nearly one percent appreciation versus the euro already this month.”
So, what does all this mean for travel money?
Foreign travel is currently off the cards for Britons, but the ban is set to be lifted from 17 May, with some countries expected to reopen their borders to tourists.
Britons could be permitted to travel to countries on the UK’s green list, which could include European nations such as Portugal, Greece, and Malta.
However, some experts have warned against swapping travel money at this time.
James Lynn, co-CEO and co-founder of Currensea, said: “While it is tempting to take out foreign currency in anticipation of a holiday I would advise against this.
“Market movements are often more marginal in reality than they appear.
“Especially during this volatile time, it’s safer to keep hold of your money in your UK bank account than purchasing or exchanging for holiday money.
“Once we are allowed to travel again, this will hopefully signify the end of the COVID bump and I anticipate this will mean the pound will improve significantly.”