The money column

The ‘B’ word is back! Laura Parsons explains how to protect your money as we near the end of Brexit transition

Laura Parsons

While many of us can hardly remember a time when ‘Brexit’ wasn’t in our vocabulary, the UK’s vote to exit the European Union took place little more than four years ago.

Since then, we’ve had a succession of political dramas, including three prime ministers and two snap elections, fears of a no-deal Brexit and all manner of uncertainty. The UK officially left the EU on 31 January this year, triggering an 11-month transition period. However, with the coronavirus crisis dominating headlines for much of the year Brexit took something of a back seat.

With the end of the transition period looming we explore the impact of the UK’s historic vote to leave the EU on the pound-to-euro exchange rate and explore how the shifts have affected currency transfers to and from France.

RIDING HIGH

On the eve of the vote in 2016, expectations that the UK would opt to remain in the European Union were high, with all the polls leading up to the event indicating that the ‘Remain’ camp would emerge victorious. The pound subsequently strengthened against currencies like the euro and US dollar.

In fact, GBP/EUR rallied to within touching distance of €1.31, its best levels since May of that year. But currency confidence in the outcome of the vote proved misplaced. Despite the widespread belief that the UK would choose to remain part of the EU, 51.9% of the population voted to leave – and that triggered a chain of events that no-one seemed prepared for.

BIG SLUMP

When it became clear that Britain was on the path to Brexit, the pound dramatically plummeted to €1.23.

The major political parties were swiftly thrown into total disarray and the lack of an obvious plan for the UK’s next steps left financial markets in turmoil. It also caused understandable panic among UK expats about what the decision would mean for them.