Bank of England

Brexit is near: what does it mean for your pounds?

Not another article about Brexit! Everyone’s had enough. But if you’re planning a getaway in the coming weeks or months, and will be needing foreign currency, then this one might just help you save some money.

So, cast away your Brexit fatigue – if only for just a few minutes – and read these answers to some common questions about the impact of Brexit on the pound from our very own CEO, Ian Strafford-Taylor.

What impact has Brexit had on the pound so far?

As of 24th January, the pound is 10% lower against the euro compared to the day of the referendum in June 2016. This means Brits heading to eurozone countries will now get £114 worth of euros less for every £1,000 exchanged than they would have three and a half years ago.

The uncertainty that has shrouded Brexit negotiations including numerous MP votes, a change in Prime Minister, a general election, deadline extensions and everything in between have all contributed to the instability of the pound.

While it has moved in both directions, it has failed to return to its pre-referendum rates against the euro and holidaymakers today are still worse off as a result.

Will the pound ever recover against the euro after Brexit?

Brexit is an unprecedented event, so we’re entering unchartered territory for the pound. This makes it difficult to predict exactly what will happen, but whether or not the pound can recover will largely depend on the trade deals the UK strikes with other countries after leaving the EU.

If the pound does recover to pre-referendum levels, we need to stay prepared for more turbulence as we continue to negotiate relationships with both the EU and other nations.

Will the pound ever go below parity?

The pound and euro have never equalled each other, although it has been close on occasion – especially in the aftermath of the 2008 crash. As for the US dollar, the lowest the pound has been is 1.05, which happened over thirty years ago, in 1985. For the pound to go below parity against either currency would be unprecedented.

Should I change my currency now?

We found that if holidaymakers bought currency when rates were at their lowest in the last 12 months compared to when rates were at their highest, the nation would have collectively lost £3.97 billion (that’s around €154 each for every £1,100 exchanged) just by exchanging currency on the ‘wrong’ day.

The safest way to guarantee getting an exchange rate you’re happy with is to lock-in the rate on a prepaid card when the pound is doing well. It also means you avoid losing money when you return from your trip and have to change any leftover cash back into pounds if the exchange rate has worsened.

What should I do with any leftover travel money I have?

We’ve found that on average people return from holiday with around £177 worth of leftover currency. If it’s on a prepaid card that’s fine, you can save it for future trips or switch to a different currency, but if that’s in cash, you’re left at the mercy of buy-back rates which are rarely favourable.

How far in advance of my holiday should I watch currency movements?

Brexit is new territory, and as we move closer towards the date when the UK officially leaves the EU, there is likely to be more turbulence for the pound. As the pound fluctuates, keeping an eye on currency rates from the time you book your trip will help you get more by exchanging currency when the pound is strongest. Sign up to our rate alerts and we’ll alert you to good rates that you can take advantage of.

When is the best time to buy currency before February half term?

The best way to secure a good rate on currency for an upcoming trip is to monitor exchange rates and use a tracker to alert you to good rates you can take advantage of. With half term just over a month away travellers should buy currency as soon as they see a rate they feel happy with.

The most important thing half term travellers can do is to avoid leaving their currency purchase to the last minute. Once they are at the airport they’ll be at the mercy of high margins and will lose out on holiday money thanks to high exchange rate margins.

Order or top-up your FairFX card before your travels, wherever you’re going. Lock in a great rate every time you load and manage your card on the go through our mobile app.

Order a FairFX card today

 

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Adam Baldwin

Adam Baldwin

Adam is part of the Marketing team at FairFX. He's keen on his sports, mainly football and the NFL, and is an avid traveller having recently visited Fiji and Vietnam.

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