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Sterling under serious pressure in the currency markets

Many holiday companies in the UK are starting to have serious doubts about the prospects for next year as the euro powers ahead leaving sterling in its wake. Only recently sterling holders were receiving €1.4 to the pound but this is now around about €1.07 to the pound with many companies exchanging sterling and euros at parity, i.e. one pound for one euro.

This will see a massive increase in the cost for UK travellers looking to book their holidays for next year and could put serious pressure on an industry which until now has been fairly "recession proof". Many UK travellers will not be aware of the situation until you actually move to exchange their currency for euros at which point they will be hit with the stark reality that sterling is under serious pressure.

As we have covered on a number of occasions of late, there appears little chance of a return to higher levels in the short term with UK base rates set to fall further over the next few months with some analysts suggesting a rate of 0% if all else fails in the government's challenge of refloating the economy. While sterling is probably the last problem on the government's list at the moment it will need to be tackled at some point.

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