US investment bank Morgan Stanley has predicted the pound will be worth less than the euro for the first time in its history.
The pound has been buying fewer euros since it fell sharply in June 2016, the day after the UK voted to leave the European Union, and now analysts from the bank said it could fall 'below parity' by early next year as the UK outlook worsens.
"What markets will focus on is this idea that the core of Europe, France and Germany, are working toward a stronger European Union, making a push toward reform that we haven't seen in a number of years," Andrew Sheets, a Morgan Stanley strategist, told Bloomberg TV. "That's structurally bullish for the euro," he added.
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Ian Strafford-Taylor, CEO of FairFX, said: "The markets don't respond well to uncertainty and the political ructions of the last few months have led to fluctuations in the strength of the pound.
"Therefore, we could see a continued volatile path for the pound with swings against global currencies until an agreement is reached and we know exactly what this means."
Credit: PA
However, every cloud has a silver lining and the decreased value of the pound coupled with the increased power of the euro is coaxing a huge influx of tourist from the Eurozone to the UK.
April saw a record 2.93 million eurozone visitors - up from 2.499 million in April of last year, according to the Office for National Statistics.
However, tourism minister Tracey Crouch was keen to emphasise that other factors aside from the weakness of the pound were drawing visitors to the UK.
"As these record-breaking figures show, the UK is one of the world's must-visit destinations," Crouch told The Guardian. "Our country has so much to offer tourists from home and abroad, from thriving cities to stunning scenery and renowned cultural attractions."
However, while the tourism may be welcome in the UK at the moment, the opposite is true on the continent.
Anti-tourism demonstrations have been breaking out in some of the most popular destinations on the mainland, with tensions further fuelled by a heatwave, nicknamed 'Lucifer'.
Spain in particular has been in the scene for many of these protests. Tensions have been rising in Barcelona for a while over the unrestricted surge of visitors. Things began to spill over this summer when Arran, the youth wing of the radical CUP party, were filmed slashing the tyres of rental bicycles and a tour bus.
"Today's model of tourism expels people from their neighbourhoods and harms the environment," a spokesperson for the group said.
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Sources: The Guardian, Bloomberg
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