Theresa May has this week called a snap general election for June 8 and the pound has noticed a sharp increase as a result.
Sterling is buying €1.20 and US$1.28, soaring above recent levels.
But the Money Saving Expert warns the pound’s performance is still weak historically.
Martin Lewis says the exchange rate depends on both activities in the UK as well as those in the country where you want to buy currency.
He said: “After the Brexit result, which the markets (rightly or wrongly) didn’t like, the pound dropped against the euro, but dropped more against the dollar – because the euro itself was weakened by the result.
“Many factors affect currency movements – general economics, speculation, relative interest rates, political stability and more. And while an election brings uncertainty, that uncertainty is known and tends to be incorporated into the current price of the pound.”
Martin said it’s impossible to tell which direction the pound will track before and after the election, with rates fluctuating by the minute.
To ensure you’re covered both ways, the Money Saving Expert advises buying roughly half of what you need at today’s rate and leaving the rest until later.
He added: “If you’re really nervous, ask yourself, “Would I be content with today’s rate of €1.20 for my holiday money?” If so and your real fear is the rate worsens so your holiday would be unaffordable, play safe and buy more than half now.
“Yet do that for safety’s sake, and if the pound strengthens, and you’d have been better off waiting, don’t let hindsight bitterness ruin your holiday.”
Another way to ensure you get the best rates is a specialist overseas credit card that you consistently pay off in full every month.
Martin explained: “This gives you the same near-perfect exchange rates the banks get on the day you spend, in almost every country, time and time again, as unlike most debit and credit cards which add a three per cent ‘non-sterling exchange fee’, these don’t charge.”
You could also buy a prepaid card and load money onto it at the current rate.
If the pound strengthens in the meantime, you lose money but if it weakens, you’re profiting.
When using exchange bureaux, Martin advises shopping around for rates online first.
He recommends Travel Money Max to compare around 30 online rates, which highlights how much airports are ripping you off.
Post a Comment