Sterling takes a pounding: how to get the best rate for your holiday cash
Sterling fell to a four-month low against the dollar today, as prime minister Theresa May’s latest Brexit plan attracted criticism from Labour and Conservative politicians alike. This has raised the possibility of a no-deal Brexit when the UK officially leaves the European Union on 31 October.
One pound was worth $1.27 on Wednesday at 11:20, down from a high of $1.33 on 13 March.
Sterling also fell against the euro and was trading at €1.13 on Wednesday morning, down 0.36 per cent on the day.
Gains made by the currency over the past few months have largely been reversed – and the pound is now trading at levels last seen during the Christmas break.
Top tips to get the best rate for holiday money
The news is likely to represent a source of anxiety for British holidaymakers planning to get away over the upcoming half-term break and who have not yet exchanged their holiday money. Fortunately, there are a number of steps that can be taken to soften the impact of currency moves.
1) Prepaid currency card
A prepaid currency card allows holidaymakers to pre-load currency on to the card and lock in the exchange rate on the day, which could be a good option if the value of the pound spikes on a particular day.
These cards also tend to offer better exchange rates than those from a bank or bureau de change. With a prepaid card, you don’t need to load all of your currency at once as they allow you to add smaller increments to avoid losing out if exchange rates look unfavourable.
2) Avoid airport bureaux at all costs
You should avoid a bureau de change at an airport at all costs, as you are bound to get significantly less for your pound. Being captive markets, airports will take a much higher margin for foreign currency. Even if the rate is just 2 per cent higher, this could be as much as £40 on the average family’s holiday spending money.
3) Use specialist overseas debit and credit cards
Many holidaymakers stick to their everyday cards to pay for goods and services abroad. But picking the right card could save you about £100 in charges in a fortnight.
4) Factor in all fees
The headline exchange rate may look good, but it’s important to check the overall price of the transaction after any fees. Often the best rate will be one with low commission and good value on handling costs, credit card charges and delivery fees.
5) Check specialist sites
It can be difficult to time exactly when to buy your foreign currency given all the volatility. On a practical level, to help you decide when the time is right, you should keep up to date with the news and check specialist rate websites such as Xe.com and Oanda.com to keep track of exchange rates and the currency markets.
Specialist brokers such as Netdania.com also offer daily reports and rate updates, and you can also keep track via the Travelex travel rate checker.