The pound hit a 10-year low against the euro last week, and fell to a two-year low against the dollar this week.
At the time of writing:
This is a lot less than you’d get for your pound a few years ago. For context, in May 2016 (before the Brexit vote):
This may not sound like a dramatic increase, but as you get into bigger figures, it becomes pretty significant:
In short: Brexit.
Exchange rates are constantly changing, and go up and down depending on the fluctuating demand for each country’s currency.
Political events impact the value of a currency, because the more unstable a country is politically or economically, the less attractive its currency is to buyers, and the less valuable it becomes on the market.
However, it can’t all be blamed on Brexit. Other factors impacting the exchange rate include:
Essentially, your pound will now get you less euros and dollars than it would have done before. This means that when you go on holiday, your money won’t go as far and things might feel more expensive.
There’s not a lot any of us can do about the value of the pound. However, you can take steps to minimise its impact on your holiday. Planning ahead and being a little bit savvy about how you get your travel money can go a long way in saving you money and hassle.
1. Look outside the Eurozone
While the pound has fallen in value against the euro and dollar, there are other currencies where the pound remains strong or has even strengthened. To get the most value from your Pounds, we’d recommend choosing a holiday destination with a good exchange rate, which might mean looking outside the Eurozone. Destinations where Brits can enjoy excellent value include Turkey, South Africa, Poland, Romania and Morocco.
2. Plan ahead
The best way to guard against any negative fallout from Brexit is by planning ahead. Given the volatility of the market, it’s a good idea to prepare for a further drop in GBP by ordering your money sooner rather than later.
As a general rule, you’ll get a much better rate when you order your travel money online, rather than waiting until you get to the airport.
3. Consider a prepaid travel money card
If you’re worried about exchange rates going up and down amid Brexit uncertainty, you can load your money onto a prepaid travel money card and lock in your rate.
Prepaid cards offer competitive exchange rates, and also protect you from being charged transaction fees abroad as you would with your debit or credit card.
Find out more about prepaid travel money cards here.