Strengthening pound gives Brits more holiday spending power

Strengthening pound gives Brits more holiday spending power

A strong recovery in the value of the pound in recent months will give holidaymakers more spending power when visiting most overseas destinations this year.

Eighteen of the 20 currencies that have fallen in value by 11% or more against the pound are for long haul destinations.

These include the US dollar, which is down 14.7% against sterling year-on-year, plus Caribbean and Middle East currencies like the Barbados dollar and UAE dirham that are fixed to the dollar.

Sales of long haul holiday currencies are already surging ahead of 2017 levels but a more cautious approach appears to be being adopted for some European ones, according to new analysis by Post Office Travel Money.

Currency sales for the first quarter indicate that UK tourists may be looking further afield than Europe when choosing a holiday destination.

This comes at a time when 80% of the Post Office’s top 40 currencies are now weaker against sterling than a year ago. All barring one of the top 40 – the South African rand – have also been falling in value over the past six months.

The pound’s biggest year-on-year gains have been against the Turkish lira (up 27.7%) and Russian ruble (up 25.8%).

However, nine of the Post Office’s ten fastest growing currencies for January-March cover long haul countries. They include the Barbados dollar with sales up 29% after the currency fell 14.7% year-on-year based on Tuesday’s exchange rates.

The fastest growing currency of all has been the Thai baht, which has surpassed a strong performance achieved in the second half of 2017. Last year’s 33% rise in sales has been exceeded by a year-on-year rise of 42% in the first three months of 2018. Sterling is currently 4.2% stronger against the Thai baht than last April.

Sales of the euro remain buoyant despite this being one of only seven currencies – all of them European – that are stronger against sterling than a year ago.

However, the pound is just 1.7% weaker against the euro year-on-year and has been moving up in value in recent weeks. It is now 3.5% stronger than at its year-low in March.

Post Office sales of the Croatian kuna are soaring despite the fact that the currency also remains stronger against the pound – by 1.9% year-on-year.

A 32% sales rise for January-March makes the kuna the Post Office’s second fastest growing currency and underlines Croatia’s growing reputation as Europe’s most desirable tourist destination.

But UK tourists visiting eastern Europe on city breaks will get less cash for their pounds because sterling has weakened against the Czech koruna (down 7%), Polish zloty (down 3.8%) and Hungarian forint (down 2.6%).

Andrew Brown, of Post Office Travel Money, said: “The appetite for travel to Croatia seems insatiable. Our kuna sales have quadrupled over the past decade with no sign yet of a plateauing in demand.

“While there have been reports of a slowdown in bookings for some other European destinations this year, Croatia seems to be a big exception.

“Another exception is Turkey where tour operators are reporting huge increases in demand. This is hardly surprising given the collapse of the Turkish lira, which has halved in value over the past five years and is currently worth almost 28% less than last April.

“When you consider that tourists changing £500 into lira will get the equivalent of £108 more in cash, it is hardly surprising that we have seen lira sales grow by 30% year-on-year in March.”

He added: “UK holidaymakers are becoming savvier when it comes to working out where their pounds will stretch furthest. Thailand has always had a great reputation for value so it is not surprising to see a marked upturn in demand at a time when prices seem to be on the rise in Europe.

“In our recent pricing surveys, Bangkok was the cheapest long haul city and Phuket was the cheapest long haul family destination.”

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