Pound reaches pre-crisis levels against euro

British holidaymakers are expecting cheaper holidays in Europe this summer after the pound climbed above £1.40 against the euro for the first time since 2007.

The euro was also at its lowest level against the dollar for 12 years.

The single currency has been weakening since the ECB announced its quantitative easing plans. While US Federal Reserve, the Bank of England and the Bank of Japan have also used QE to create new electronic money in the past, the practice does drive down currencies.

Visitors to the Eurozone will receive more euros in exchange for their pounds or dollars, while exports from the area will become cheaper.

Currency traders are preparing for the euro to fall below parity against the dollar in the coming months, as further QE measures coincide with the first interest rise in the US since the global recession. Since the beginning of 2015 the euro has fallen more than 11 per cent against the dollar.

The strength of the dollar added pressure on a number of emerging market economies including Mexico, Turkey and Brazil, The Guardian reported.

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