With some families still paying for the half term holiday, surely it’s tough to start paying for the summer one? But that seems to be the advice of many experts as the Brexit debate takes its toll on the pound and which could leave those who choose to buy their holiday cash at the last minute, seriously out of pocket.
Holidays should be about making pleasant decisions such as where to go, what to do there and what to take. But we may now have to make some unpleasant ones too, namely do we buy our holiday cash now (and so lock in at a better exchange rate but have the money tied up in a foreign currency for a few months) or leave it till nearer the summer, but run the risk of having a more expensive holiday as a result?
The Brexit debate seems to represent a perfect storm for the money markets and would-be holidaymakers look as if they’re going to bear the brunt of it. The prospect of Britain pulling out of Europe has caused the pound to plummet to levels last seen at the height (or depths?) of another crisis, the banking crisis of 2009.
A pound now will buy you $1.35 compared to the $1.51 you would have got a year ago. That’s $80 less for every $500 exchanged. And it’s not just the dollar from which the pound has retreated. Its taken a beating against the euro too, down from €1.40 last year to €1.23 this summer.
Hedging your bets seems to be the name of the holiday game and most of the advisory websites that we visited seemed to suggest that it would make sense to buy at least half of your holiday cash now and buy the other half later. Certainly, a lot more people are buying their holiday cash now. The Post Office, which is Britain’s biggest currency seller (and you though everyone was queuing up just to buy stamps), exchanged 43 per cent more euros over the past week than this time last year. On some days, it reported selling double the normal amount for March.
Clearly, the more pessimistic amongst us have taken the view that leaving Europe will cause the pound to plummet so stock piling their holiday cash now makes good economic sense. But making economic sense also throws up some practical considerations, such as how to lock in to exchange rates in advance? Fortunately, some currency providers will let you order the currency today (and at today’s rates) but collect the cash later, either at a branch or even at the airport. Loading cash onto a pre-paid card makes good sense too (and not just economic as its much safer than carrying around wads of notes, however rich it makes you feel).
According to a recent research study, the average British family spends a whopping two months’ salary on their summer holiday which must make it one of their most significant household budget items. Clearly, this year is going to need some pretty careful planning if that budget doesn’t get busted.