Steel yourself for the sterling switchback ride
As holidaymakers are hit by currency swings, how to...
A ROLLERCOASTER ride for sterling last week reminded holidaymakers of the challenges faced in stocking up on spending money as the Easter break looms.
The currency upheaval that saw the pound lurch in all directions against key currencies means travellers wanting a good deal on their spending money need to think beyond changing their cash at the airport – the most expensive way to buy foreign currency – and even where they should travel.
WHAT IS HAPPENING TO THE POUND?
FRESH Brexit jitters last week followed swiftly by higher inflation figures and then the terror attack on Westminster put sterling through its paces.
The pound reacted badly to the uncertainty for the economy that will result from the announcement of the country’s official resignation from the European Union – due on Wednesday. But t he currency bounced back on news that inflation rose sharply from 1.8 per cent to 2.3 per cent. While this is bad news for families struggling with higher household bills, it signals to the world that interest rates could soon be heading upwards and make UK deposits a more attractive investment. Travellers are already facing a spending money squeeze after the vote to leave the European Union last June took the stuffing out of the pound. Sterling is down 9 per cent against the euro compared to the same time last year and by 12 per cent against the dollar.
This means holidaymakers pocket the equivalent of £95 less in euros for £1,000 of spending money compared with March 25 (Good Friday) last year – the cost of an adult day ticket to Disneyland Paris.
Those heading across the Atlantic are the equivalent of £131 worse off – the price of a one-day ticket to the Universal Studios theme parks in Florida.
POUNCE WITH YOUR POUNDS
BUT there are still ways to get a good deal on travel cash by planning ahead. Ian Strafford-Taylor, chief executive of currency exchange specialist FairFX, says: ‘The strength of the pound changes
daily. Political shifts and conversations around Brexit and the invoking of Article 50, Britain’s resignation from the European Union, mean it is going through a volatile period.
‘ But it doesn’t mean holidaymakers can’t get value for money. They just need to make sure they buy their currency when the pound is at its strongest. Leaving it until the last minute will mean having to accept the exchange rates on offer on that day.’
By keeping a close eye on exchange rates, travellers can jump in when the pound moves in their favour and lock in at a guaranteed rate – even if they have not booked a holiday yet. Strafford-Taylor says: ‘We’re seeing more holidaymakers doing this. If you don’t have time to do it yourself, set up a free tracker to receive an email alert when your currency is best to buy.’
Being flexible with a holiday destination will also help pounds stretch further. Faraway places – such as Mexico, Venezuela, Argentina and Malaysia – are least affected by the weakened pound.
CHECK FLIGHT COSTS
FLIGHT prices can be just as influential as currency when making a vacation choice. Recent analysis by flight comparison website Kayak reveals sharp price drops for many destinations this summer.
Flights to parts of Croatia are down by 43 per cent and popular resorts such as Ibiza, Majorca and Alicante in Spain are a third cheaper. The bargain destination is Mexico, with flights to Mexico City down 39 per cent or £290 cheaper than a year ago. Prices for New Zealand have dropped by a fifth, a saving of £212.
Kayak reports a decline in interest in travel to the US even though prices for many flights, such as those to Orlando in Florida, have fallen by more than half.
Kayak’s Suzanne Perry says: ‘Searches for flights to America have dropped since President Trump came to office in January but there is a longer term trend that shows they have fallen by over a half in one year.’
The British passion for Nordic Noir and Scandinavian culture has had the opposite i mpact on fares to countries such as Norway and Sweden. Stavanger i n Nor way, for one, costs 150 per cent more to fly to this summer.