What does the chart show?
It shows the twists and turns of the pound against the dollar in a week where a series of crucial votes on the Brexit process took place.
So what actually happened to sterling?
Tuesday was a very choppy day for the currency. After prime minister Theresa May’s dash to Strasbourg, sterling initially strengthened above $1.32 in early trading amid hopes that a revised Brexit deal with European Commission president Jean-Claude Juncker would be enough to win the approval of the Commons.
But just after 11am, sterling experienced its biggest hit of the week when Geoffrey Cox, attorney-general, said the altered deal made no meaningful legal change to the previous concessions. This prompted investors to sell the currency, as fears grew of the UK leaving the EU without a deal.
Over the course of Tuesday, sterling slid by about 0.6 per cent against the dollar to below $1.31, and fell 1.1 per cent against the euro. Sterling fell again in the evening after Mrs May’s deal was resoundingly rejected by parliament.
What happened next?
After MPs voted to reject a no-deal Brexit on Wednesday, the pound rallied 2.4 per cent, reaching $1.338, a high not seen since June 2018. This was a clear sigh of relief from the markets — currency traders have long feared the economic disruption of the UK crashing out of the EU without a deal — but also reflected emerging hopes within Westminster that Mrs May would put her Brexit deal to MPs for a third time as early as next week.
On Thursday, MPs voted in favour of extending the current March 29 Brexit deadline. To do so, Mrs May still needs approval from all 27 EU leaders. The pound trimmed its losses slightly, before falling to $1.3212 as the full political ramifications of an extension remained unclear.
I’m planning an Easter holiday — when should I exchange my currency?
Even seasoned currency traders are struggling to predict where sterling will go next, but one thing holidaymakers can control is the cost of exchanging money.
If you spend on plastic overseas, most UK banks and credit cards will charge a currency conversion fee of about 3 per cent. However, plenty of challenger banks offer “fee free” cards. Even so, if the overseas card terminal offers the choice to pay in pounds, be very careful — the exchange rate is likely to be much higher than paying in the local currency.
And avoid buying currency on your day of travel at the airport. Research from FairFX, a travel money exchange firm, found travellers could end up paying 14 per cent more than the market rate.
What will happen next?
“Sterling’s rollercoaster will continue in the days ahead,” said Stephanie Kelly, senior political economist at Aberdeen Standard Investments.
“Key factors determining the size of any moves are whether the EU grants an extension, how long that extension would be and the possibility that Theresa May runs out of political road and we end up with a snap general election.”
There is growing expectation in Westminster that the prospect of delaying Brexit will be enough to convince hardline Brexiters to back the third attempt at a deal.
Jameel Ahmad, global head of currency strategy and market research at forex broker FXTM, said: “Should we see the old saying ‘third time’s a charm’ prove true, Brexit will happen at some stage and this would likely spark a relief rally in the pound.”