The pound to Euro exchange rate fell to its lowest level since January on Tuesday, raising the prospect of financial turmoil for Britons set to go abroad for the summer holidays.
Sterling also crashed to a two-year low against the dollar as candidates vying to be Britain’s next prime minister attempted to outdo each other over Brexit.
Boris Johnson, front-runner to be chosen leader by Conservative Party members, as well as his rival Jeremy Hunt, said on Monday evening they would not accept the so-called Northern Irish backstop element of Theresa May’s Brexit deal.
The backstop has been likened to an insurance policy to ensure the Irish border remains open.
Both Johnson and Hunt are trying to appeal to the majority of the Tory party members who are keen to make a clean break with the European Union.
They used a Sun/TalkRadio debate on Monday night to put themselves on a collision course with the EU and potentially made a no-deal Brexit far more likely by setting out much harder negotiating positions than expected.
The contest between the pair “has transformed into an arms race of who is a bigger Brexiter,” Vasileios Gkionakis, global head of forex strategy at Lombard Odier, told the Reuters news agency.
Markets see their positions as sharply raising the risk of Britain leaving the EU on October 31 without any transition trading agreements in place, potentially forcing the Bank of England to cut interest rates to stave off economic catastrophe.
The state of the pound since the Brexit referendum has also been laid bare in further analysis by Bloomberg, showing it had depreciated 16% in the time period.
The pound weakened 0.9% on Tuesday to $1.2409, having plunged earlier to $1.2396, the lowest since April 2017.
Against the Euro, the pound fell 0.5% to 90.47p, the lowest since the beginning of the year.
Nick Boden, head of Post Office Travel Money, advised travellers to respond to sterling’s falling value by being savvy with their spending.
“Picking a destination where prices on the ground are low can outweigh the impact of a weak exchange rate, but a destination where prices and cheap and sterling is strong is the best bet,” Boden said.
The company said a surge in sales of Turkish lira signalled holidaymakers were willing to swap to more adventurous destinations to cut costs on things like meals and drinks when abroad.