When European Union leaders granted the UK a six-month Brexit extension in April, Theresa May’s government must have breathed a collective sigh of relief at the chance to find the best deal with which to secure Britain’s future outside of the EU after 31st October.
But, much like the breakup of any once-harmonious union – from the Beatles to the Spice Girls – it’s difficult not to be wary about the longevity of the UK’s post-Brexit solo career with the impact of a potential No Deal EU exit still looming large overhead.
Will we limp along in the international charts with a few decent hits before fading into obscurity, or embrace a new business boom a la Victoria Beckham? This question is particularly valid when it comes to thinking about our travel money. The tumultuous strength of the Great British pound can be immediately noticed in the rise and fall of our holiday exchange rates.
What does the UK’s exit from the EU actually mean for our travel money?
Should we be savvy spenders, buying up as many euros and US dollars as possible to make our holidays a little easier in 2020, or do we hold onto our cash, put the kettle on and wait for all the panic to blow over?
The real answer is, unsurprisingly, a bit of both.
At Volopa, we know that currency exchange is a flexible commodity, and although there are a wealth of methods we can use to predict how currencies are going to perform, events like Brexit can disrupt even the most certain of forecasts simply because there are so many possible roads ahead in the short- and long-term of our economy.
How the pound has been performing since the Brexit vote?
The value of British currency has been closely tied to the latest Brexit news ever since the results of the EU referendum on 23rd June 2016 – and by any standards, it’s been a wild ride.
The state of sterling has experienced dramatic shifts in exchange rate since the referendum, fluctuating in value in an unprecedented way. That first 24 hours saw a dip of 10% against the dollar – a first for the historically stable pound – as well as a 5% loss against the euro. While there was some recovery going into 2018, at the beginning of 2019 the pound actually plummeted down a further 13% against the dollar and 14% against the euro.
But that’s not to say it’s all doom and gloom.
Even at a slightly lower rate than in its heyday, the pound has climbed back strong against the dollar, making American currency a valuable investment. USD is often considered the world’s unofficial currency, thanks to the many countries and territories that use the dollar either as official currency or as a commonly-used alternative.
In fact, with more than two dozen countries buying, selling and shopping in USD, the dollar benefits from a rate of use that trumps all other global currencies.
Should you stockpile currency for later on?
When it comes to buying for later, our experts suggest that there’s never a bad time to invest in the mighty dollar, particularly with forecasts implying that the pound will continue to hold steady ahead of Brexit trade agreements.
The best rate since the referendum was in April 2018, when the pound was valued at $1.41 – so smart money says this is the rate to watch out for.
In contrast, the euro exchange rate has been far less predictable, rising and falling between highs of €1.20 to lows of €1.037 – but never reaching the pre-referendum average of €1.30. But experts have not been surprised.
If you look at trends over the last five years, the sterling-to-euro has fluctuated constantly. Now, with the euro-to-sterling exchange rate seemingly in a holding pattern until a Brexit deal is in place, there in fact seems little benefit to bulk-buying euros for your holidays, as you may have heard suggested.
The good news is that this uncertain time doesn’t seem to be putting us off our Mediterranean escapes, with 61% of British holidaymakers planning to visit Europe this year compared to 63% last year, and more still heading outside the EU.
How to make the most of your money abroad
It helps that savvy spenders can find plenty of holiday deals available online, but being smart about your exchange rate is another way to save.
Pre-loaded cards like our Volopa pre-paid Mastercard can be a boon in avoiding exorbitant foreign exchange fees and make your travel money go further – our own offers instant currency exchange between 14 currencies at the interbank rate plus a standard foreign exchange of just 1%.
Ultimately, the key to making the most of your money abroad, regardless of the rate you buy at, all comes down to spending locally. Always choose to pay in local currency rather than sterling, to escape hidden exchange fees.
Avoid paying for travel money with credit cards – and therefore paying extra withdrawal fees – or buying cash at transport hubs, such as airports, as there better rates available elsewhere online.
And for those looking for ultimate flexibility, particularly on European trips, pre-paid currency cards can lock down the best exchange rates for your travels before, and during, your holiday, leaving you constantly topping the charts.