Five questions about... Exchange rates

 

Is the pound slumping again?

Yes it is. This week the pound fell to its lowest level against the dollar since June 2010.

So how much worse off will I be when I go on holiday this summer?

That depends on what happens between now and when you depart. But compared to last summer when £500 would have bought you 642.5 euros, today it will only buy you 579 euros, according to Currencies.co.uk. Meanwhile Travelex reckons that those heading to the States will now receive $68 less when exchanging £500 into US Dollars.

Why is it happening?

There are lots of reasons but chiefly it's lack of confidence in our economy. This week it was worse-than-expected UK manufacturing figures that sparked fresh fears of a triple-dip recession.

Should I buy currency before the summer?

It's an idea, but if the pound recovers then early buyers will have less holiday cash. If you have savings and are happy with the rate you can get on currency now then go ahead and buy it. But buy online – not the high street – for the best rates.

What about alternatives to currency?

Think about a pre-paid card. Rates are often better and you can leave cash on the card to avoid having to worry about currency fluctuations.

 

Independent partners: Bank-beating exchange rates and no hidden fees on all your international payments. Find out more

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

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