Cashing in on the Exchange Rate Circus?

So today is ‘Hollibob Friday’; school’s out and the rush to the airport has begun.

UK airports are crammed with expectant and excited holidaymakers,

all looking to escape the drudge of daily life.

Travelling abroad has in recent years become uncertain due to terrorism and brexit; the latter producing much debate and a creeping reality that taking that journey abroad is going to deliver new challenges.

Since the 2016 Referendum result was delivered, the immediate affect was the fall in the UK Pound. At that stage the Pound fell by 20% but has rested around an overall 12 to 15% fall in its pre-Referendum value.

As I remarked in 2016 and through 2017, the £ to € value engaged between a market rate of €1 - €1.18 to £1; I also observed that travelling through UK airports delivered the worst deal where the exchange rate rested at €0.99 to €1 to one UK Pound.

As holidaymakers fly off to the holiday destinations today, many who have left this important aspect to the last minute are discovering that the rate of exchange at UK airport exchange shops, is currently resting at €0.88 to £1; this suggests a 30% drop in the € to £ value since June 2016 (open market rates rest at around €1.11 to @1 which suggests a drop of 12% to pre-Referendum values)!

It perhaps suggests that airport shops are profiteering at the expense of holidaymakers, but they will claim that they are faced with higher charges than those experienced on the High Street. There may be some validity in this argument, particularly when you examine the historic £ to $USD movements, which reflect the volatility of the £, suggesting an underlying global set of issues which the UK £ will have to accept in the future.

Looking to that ‘volatility’, there is no doubt that whilst there is a brexit factor at play here, there may be other external aspects. Firstly, as the UK delivers its break away from the EU block, the UK £ will become prey to money-market investors. Secondly, politics is playing a greater role in creating global uncertainty, from the threat to established global alliances, to the prospect of global trade war(s). Whilst many Consumers may feel that the political element is beyond their control, it will continue to impact their pockets with the result that future holidaymakers will either travel less or decide to suck up the extra costs involved to secure that precious two weeks away.

For the present, Consumers would do well to follow my 5 point guide on how to get the best exchange for their precious £’s:

  1. In the first instance, DO NOT wait until you get to the airport to change your money - you will not get the best deal;
  2. Before you travel, research the various deals on offer to change your cash - do a compare and contrast and understand the charges, if any, that you will have to pay, particularly if you change money upon your return!
  3. Be very careful about using your credit card abroad - be aware of the charges you may have to pay, not just to withdraw money from the ATM, but also whether you are getting a good rate of exchange;
  4. Think about established ‘pre-paid’ cash cards from reputable companies - here you can put your money on the card and withdraw in local currency at your destination. But, you need to make sure what costs you may be liable for when you withdraw money and that rate of exchange - nonetheless it may be a competitive solution to your bank’s credit card!
  5. If you decide to only take cash abroad, do not carry it all together. Split your cash between your party members and make sure that your travel insurance will insure any loss - making sure that you can demonstrate that you were carrying any cash claimed.

As the next few years will demonstrate, holidaymakers are going to have to think about a great deal more and recognise that the stability that once accompanied travel is for the present gone on its own holiday!