British holiday makers will get hit by the fall in the Pound against the Euro. | Manuel Lorenzo

Despite some British pensioners in the Balearics getting an increase in their pensions next year, the increase may be offset by a weaker Pound against the Euro, not to mention the rise in the cost of living and inflation.

According to foreign exchange strategists at RBC Capital, the Euro will likely rise against the Pound in 2023 owing to their pessimistic view on the UK economic outlook.

Being ‘long’ EUR/GBP forms one of RBC Capital’s thematic trades for the coming year as analysts expect further weakness in the Pound amidst a chronic UK economic underperformance, persistent twin deficits and improved demand for Eurozone assets.

“September’s ‘fiscal event’ may have brought the UK imbalances into sharp focus, but they were there before the short-lived policy changes at that time,” says Elsa Lignos, Global Head of FX Strategy at RBC Capital Markets, PoundSterlingLive has reported.

Related news

This will also mean that British tourists will find the Balearics slightly more expensive as their holiday money will not go as far as they would have expected.