The Bank’s report included a ‘stress test’ which shows that the UK’s largest lenders have enough money to ride out a potential economic crisis, with the economy and banks remaining ‘resilient’ amid current challenges.

This positive outlook strengthened the pound against other major currencies such as the US dollar and euro. The pound rose against the dollar to a high of $1.2970 at one point, its highest since April 2022. It hit a 15-month high against the euro at 85.28p earlier this week.

With the summer holiday season coming up, the pound strengthening could mean now is a good time for many people to buy their travel money.

Where to buy foreign currency

Where and how you buy your currency can make a big impact on your holiday budget.

Most people like to carry some foreign cash with them when they jet off to their destination, combining this with debit and credit cards on arrival.

It’s best to shop around for physical currency in advance of your trip. Changing your money at the airport might be convenient, but it’s also the most expensive option. Your bank might also seem like an easy option – but it probably won’t offer the best rates either.

When comparing foreign exchange deals, you need to look at how many dollars, euros or other currency you’ll get for a set amount of pounds once all the fees and charges have been factored in. Don’t be tricked by “best rates” or “commission free” deals – the total cost is the most important thing.

A good way to compare travel money rates is to use Travel Money Max from MoneySavingExpert. It shows the best rates for currency delivery and collection based on the currency you need and where you live. You can order money online then collect it – this is cheaper than just turning up.

The best debit and credit cards to use abroad

Most debit and credit cards charge users extra when they go abroad. For example, you might be charged a ‘non-sterling transaction fee’ and/or a fee for overseas use. Your bank might also charge you an additional fee for using a foreign ATM.

Not all banks charge these fees. First Direct has just scrapped its overseas fees for debit card customers. Other cards that are fee-free to use abroad include Chase, Monzo, Starling and Kroo.

Top credit cards to use abroad include Barclays Rewards and Halifax Clarity. These are fee-free abroad and offer competitive exchange rates.

When paying by debit or credit card in a restaurant or shop abroad, or withdrawing cash from an ATM, watch out for dynamic currency conversion (DCC). When you make a purchase abroad, the merchant (i.e. the retailer or ATM) might ask whether you want to be charged in the local currency or your home currency.

Paying in your home currency might sound like a good plan but it allows the merchant to convert the purchase from the local currency on your behalf, and the exchange rate is virtually guaranteed to be worse than that calculated by your card provider. So, the golden rule is always pay in the local currency.

Where will your pound go furthest?

Which? did some research into the cheapest destinations for Brits earlier this year. The consumer champion looked at average flight and hotel prices, and the cost of food and drink, as well as the strength of the pound against the local currency.

It found the cheapest destinations in Europe were Bulgaria, Portugal, mainland Spain, and Hungary. It also listed Turkey as a cheap destination for Brits.

If you want to go further afield, Thailand, South Africa, Costa Rica and Mauritius all worked out fairly affordable. If you fancy the US, Florida is much cheaper than New York.