Shares of Manchester-based holiday retailer On the Beach Group plc (OTB) fell 17% on Friday after it issued a profit warning saying it has been hit by the plummeting value of the pound amid the risk of a no-deal Brexit.

On the Beach said the falling value of sterling against the euro since May has forced it increase its holiday prices compared to competitors.

The package holiday operator said it does not hedge its exposure to currency changes, unlike larger travel industry rivals.

Sterling has fallen 6.9% against the euro over the past three months, with £1 currently valued at only 1.08 euros.

In a trading update, On The Beach said: “On the Beach operates a flexible model incorporating dynamic rather than currency hedged pricing for the packages that it provides its customers.

“With the increased likelihood of a no deal Brexit, Sterling has significantly devalued against the euro since the beginning of May and this accelerated at the end of July, continuing into August.

“Whilst the group has seen a strengthening of demand in H2, this weakening of Sterling leads to a significant increase in OTB prices versus full risk competitors with currency hedges.

“As OTB remains focused on profitable growth, these relative price increases make it difficult for the group to gain share of market while maintaining margins.

“As a result, the group anticipates delivering a full year performance below the board’s expectations.”

On the Beach Group CEO Simon Cooper said: “In what is a difficult general economic climate, we remain confident in the resilience and flexibility of our business model, focusing on profitable growth and an ability to capitalise on any structural changes in the market.

“In FY19 we have invested significantly in our infrastructure, talent and technology to ensure that we build strong foundations to support our strategic objectives.”