The pound sterling has suffered its biggest drop against the euro in a single day since December, currency charts have revealed.
The pound-euro exchange rate plummeted from €1.1903 on January 31 – Brexit day – to €1.1751 on February 3 after Britain left the EU.
It had soared to the dizzying heights of nearly €1.20 on December 13, the day after the Conservatives won a huge majority at the General Election.
But the big drop, recorded by PoundSterlingLive, will now hit Brit holidaymakers planning to head abroad for some winter sun as their pounds see less euros in return.
Experts reckons the drop is the result of the UK-EU trade negotiations getting underway, which will see the uncertainty surrounding Brexit drag on until December 31, 2020.
A spokesman for PoundSterlingLive said: “The overarching narrative amongst currency market commentators and analysts is that the opening salvos to the EU-UK trade negotiations are to blame: both sides set out there stalls ahead of a year of negotiations which are expected to be tense and fraught with disagreement.
“(EU chief negotiator) Barnier told his audience that a comprehensive and far-reaching free trade deal can be achieved if the UK stays aligned to EU rules.
“The UK's Prime Minister Boris Johnson yesterday argued alignment makes the country a rule taker and defeats the point of Brexit which was ultimately a decision taken by the British people to break free from the political and legal gravity of Brussels.
“The upcoming negotiations will therefore be a game of chess that sees the UK trying to gain as much tariff-free wins as possible why rejecting the reach of Brussels' rules on state aid, the environment and tax.
“Brussels also wants to leverage substantial rights on fishing from the UK while keeping the UK signed up to the European Convention on Human Rights and the European Court of Justice.”
Reacting to the drop in the pound, which is also a 10-day low against the Euro on top of the sharpest one-day fall since December, one expert also supported the argument that the trade negotiations have sparked the sudden drop.
Michael Brown, Senior Analyst at Caxton, said: “Sterling stumbled to a 10-day low against the Euro, and a year-to-date low versus the US Dollar on Monday as concerns over the UK and EU failing to agree a trade deal resurfaced after PM Johnson and EU Negotiator Barnier laid out their negotiating positions.
“This sell-off does, however, seem overdone given that negotiations haven’t yet begun, and that the talks will likely see red lines softened as the two sides move towards a ‘landing zone’ in which a deal can be agreed.”