Pound sterling at seven year high against the euro

The pound is at its highest value against the euro for seven years, reaching € 1.40 for the first time since the end of 2007.

This means that Britons who holiday in Europe this summer will see their money go 15 per cent further than it did last year.

The rise follows recent news that the European Central Bank has started its programme of buying government bonds, as well as fears that Greece will leave the Eurozone.

Last summer, £1 was equal to € 1.2, which meant that for every £, UK holiday makers received € 1.18. £600 bought € 707. This year, holiday makers will receive € 822 for the same amount.

Jeremy Cook, head of currency strategy and chief economist at World First, foreign exchange traders, said that the euro is being ‘hammered’ because of the European Central Bank’s bond buying scheme, concerns regarding Greece’s future within the Eurozone and negative bank deposit interest rates.

European creditors have called on Greece to agree to a list of reforms before they are prepared to release loans. However, Dutch finance minister, Jeroen Dijsselbloem, has said that there has been very little progress made and that Greece is wasting time by refusing to seriously consider engaging in a programme of reforms.

The president of the European Central Bank, Mario Draghi, said that the bank intends to continue buying government bonds at least until the second half of next year, 2016.

The European Central Bank has a remit of keeping inflation at or below 2 per cent but it is currently close to deflation or negative inflation. Mr Draghi was optimistic, however, saying that spending by consumers was expected to improve during 2015, as the bond buying programme took effect. He also said that he expected demand for European exports to rise as the weak euro made prices more competitive.