The pound has tumbled to an eight-month low against the euro, spelling higher costs for British holidaymakers getting ready for summer breaks.

Sterling slipped close to €1.11 as the euro strengthened in reaction to remarks by European Central Bank (ECB) president Mario Draghi while the UK currency was again buffeted by fears over Brexit.

The pound's dip - of as much as two cents - took it to its lowest level since November 2016.

It will weaken the spending power of British families preparing to flock to Spanish beaches and French campsites when school holidays begin later this week.

Sterling was also lower against the US dollar - at a time when Washington is undergoing its own political turbulence - dipping below $1.30 after spending several days above that level.


But it was the strong performance of the euro that was mainly making waves on currency markets.

It shot higher against the dollar as well as the pound despite the ECB marking no change to interest rates or wider monetary policy guidance at its latest meeting.

Image: European Central Bank President Mario Draghi announced no changes to monetary policy

Traders seized on comments by Mr Draghi that policy makers would discuss changes to its €2tn stimulus programme in the autumn.

The euro has been strengthening recently as signs of an economic recovery on the single currency bloc increase speculation about tightening policy.

Ultra-low interest rates and a huge programme of bond-purchasing, or quantitative easing - effectively pumping money into the economy - were put in place when the economy was in a much more fragile state.

An upturn and return to normality should put an end to the need for this support - and the withdrawal of the stimulus will make the currency a more attractive bet.

Patrick O'Donnell, senior investment manager at Aberdeen Asset Management, said Mr Draghi's comments were his way of endorsing the recent upward trend for the euro - without announcing anything new.

Kathleen Brooks, research director at City Index Direct, said: "No news means no change in the euro's trend, which for now is higher."

Meanwhile on Thursday, the pound was under pressure as "fundamental" differences over EU citizens' rights and the jurisdiction of the European Court of Justice emerged following Brexit talks.

Elsewhere, International Trade Secretary Liam Fox said a bespoke trade deal between Britain and the European Union should be "one of the easiest in human history" to reach but that Britain could "survive" without an agreement.

Earlier, the pound had been buoyed by better than expected official figures on retail sales for June, before the gains faded.