Pound goes up after snap General Election called
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The pound rose sharply after Theresa May’s shock General Election announcement this morning.
Sterling jumped nearly 0.9% against the dollar, and was also up against the euro.
But the announcement wiped more than £32billion off the value of Britain’s 100 biggest companies.
The FTSE 100 dived more than 125 points in reaction to the rise in the pound.
A stronger pound dents the overseas earns of UK-listed companies when they are converted back into sterling.
Sterling’s rise will also bring some relief to Brits heading abroad on holiday.
What this means for your holiday
(Photo: Getty)
"For everyday Brits, the recovery of the pound has a long way to go before holidaying overseas becomes cheaper, but this is another overall positive for sterling," said Simon Phillips, retail director at Number 1 Currency.
“With this turnaround election taking place in just six weeks now is the time to be increasingly savvy when shopping for foreign currency.
“Always make sure to shop around for the best currency deals, as getting the best rate on your holiday money can sometimes be a question of the right timing.”
“Alternatively, if you’re yet to book a holiday, you could consider going somewhere further afield than the Eurozone where your pound will stretch further.”
How to get the most for your pound abroad
After a tumultuous year for the pound, which fell heavily against the euro and dollar in the aftermath of Brexit, British holidaymakers are being urged to keep a close eye on how currency affects costs before deciding where to travel.
(Photo: Getty)
Here are FairFX's tips on getting the best exchange rate you can:
Track currency: Set up a currency tracker which will alert you to good rates. Lock-in rates: If you know you’re travelling later this year, plan ahead. Pre-load a prepaid currency card to lock in rates and protect yourself from any potential further decline. If you’re happy with the current rate on offer, buy your currency now to guarantee that rate for your future holiday. Buy wisely: Don’t leave changing your travel money until the last minute. Exchange rates at airports can be over 10% more expensive meaning you could lose £100 of cash for every £1,000 you change. Stay alert: Once you’re abroad, beware of the double exchange rate dupe. If you let the seller in a shop or restaurant covert the price back into pounds, they can choose their own exchange rate and you’re more likely to be on the less favourable end of the dea Cards: Debit and credit cards are good backups but beware of ATM and transaction fees as well as what exchange rate you’ll be forced to use. Instead, use a specialist currency card or a card designed for overseas spendin Always use local currency: If you have the option of paying – or withdrawing cash – in pounds rather than the local currency, always say no. This allows the other party to decide the exchange rate, a process known as Dynamic Currency Conversion, and it’s unlikely the rate will be in your favour. Different money habits: Check out any travel money anomalies before you travel. In America, for example, you definitely need to remember your PIN – outlets are migrating from swipe & sign to chip & pin so don’t get caught out.
A tough time for businesses
(Photo: Chris Ratcliffe/Bloomberg via Getty Images)
Neil Wilson, senior market analyst at ETX Capital, said: “For investors it adds another layer of complexity to an already uncertain picture for UK and European assets.
“Volatility is likely to remain elevated over the coming weeks.
“And as elections are so unpredictable, there is always the outside risk it could spark a reversal in the entire Brexit process.”
The FTSE 100 was also hit by a drop in iron ore prices, which sent mining stocks to the bottom of the index.
Laith Khalaf, senior analyst at stockbrokers Hargreaves Lansdown, said: " Of course the benchmark FTSE 100 is far from a pure barometer of the perceived health of the UK, given the global nature of the companies that constitute the index.
"Markets can get a case of the jitters in the run up to elections, but this one may be different seeing as it comes in the wake of the Brexit vote, and the polls suggest the incumbent government is likely to remain in power and gain more seats.
"Nonetheless a snap election does potentially open the door to some market volatility in the coming months, though investors shouldn’t let their investment decisions be dictated by swaying polls."