Sterling slides amid Brexit uncertainty

Sterling slides amid Brexit uncertainty

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Lower prices in resorts in many destinations will cushion the blow of sterling sliding to a 13-month low against the euro, Post Office Travel Money claims.

The pound suffered its biggest drop in almost seven years against the US dollar due to uncertainty over a possible British exit from the European Union.

Yet price cuts in most European resorts and weakening currencies against the pound in many long haul destinations such as Mexico, Malaysia and Thailand will help counteract the weakness of sterling, according to latest research.

While the US dollar is at a five-year high against the pound, making Orlando and New York around 10% more expensive, three other dollar currencies are significantly weaker. The Australian, New Zealand and Canadian dollars have each fallen in value since last February and are now more than 10% weaker than two years ago.

The biggest gain for sterling has been against the South African rand so UK tourists will see travel cash stretch 26% further than last year. This means that sterling has doubled in value against the rand in just five years.

Sterling is also surging against the Mexico peso, which means that Cancun will be a bargain bet in 2016, Post Office Travel Money predicts.

The pound has risen in value by 6% since the start of the year and has gained 18% against the peso in the past 12 months. This means UK visitors changing £500 will get £76 more pesos than a year ago. Mexico may therefore be a better value than the Caribbean, where the pound buys 7% less currency than a year ago.

Holidaymakers heading to Asia and the Indian Ocean will also be better off. A sterling surge of more than 9% against the Malaysian ringgit compared with a year ago has compounded the impact of falling prices in Penang to make a selection of tourist staples 27% cheaper in Malaysia’s most popular destination. Sterling has also strengthened by 1.5% against the Thai baht year-on-year.

Despite a fall of more than 10% since last summer when sterling hit €1.41 to £1, the picture is far from gloomy for people planning visits to the eurozone.

Post Office Travel Money research shows that fierce competition to attract tourists has led to hefty price-cutting in many popular holiday destinations – resulting in lower rather than higher prices this year.

Meals and drinks will cost UK visitors 13% less than a year ago at £27.56 on the Portuguese Algarve and on Corfu to £42.66 because local price falls far outweigh the slide in sterling.

Prices are also cheaper in Sorrento by 5% to £70.11 and on par with last year in the Costa del Sol at £34.44, the study shows.

But people planning short breaks to Prague face higher costs due to a combination of the Czech koruna having risen in value 7.8% since last February and higher meal prices. This means that Prague is likely to be around 20% more expensive than last spring.

Andrew Brown of Post Office Travel Money said: “This is definitely a year when it will pay people to do their homework before booking a destination.

“With sterling’s recent fall in value against more than half of our best-selling currencies, you can’t blame them for thinking twice about where to go on holiday.

“However, canny travellers will be quids in if they opt for destinations with weak currencies or those where local prices are low. Better still, if they combine both elements, their holiday money will stretch further.”


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