Five questions to ask about: The weak sterling

Why is the pound falling?

Last Tuesday the pound took its biggest one-day drop against the dollar since January 2009, and it didn't fare much better against the euro. Sterling's current weakness stems from growing fears that the forthcoming general election will result in a hung parliament due to the narrowing lead held by the Conservatives. Markets do not like uncertainty, hence the drop in the pound.

Is it likely to remain low?

This depends on a few factors, the election being the main one. The fear is that if we end up with a hung parliament, the government won't be strong enough to push through the measures necessary to reduce the country's huge budget deficit and ensure economic recovery.

What does this mean for me?

A weak pound means we get less for our money when travelling abroad. The pound is at its weakest against the dollar and euro, so this means anyone with plans to travel to these places will need to shop around for the best exchange rate available in order to get the most for their money.

How can I get a good deal when travelling within Europe and the US?

Comparing exchange rates will ensure that you make your money go further while abroad. The best rates are usually offered online, while prepaid cards are also competitive.

The golden rule is to make sure you order your currency in advance – don't wait until you get to the airport or ferry port to buy it as this is one way of guaranteeing you won't get the best rate. Many of the online services will either deliver the money to your home, or let you collect it when you get to the airport.

Should I change my holiday plans?

If you've already booked a holiday, it's probably not worth changing your plans because of the exchange rate. However, if you've yet to book, the pound's current weakness against the dollar and euro may influence the decision about where you go. Destinations outside the euro and dollar zones, such as Turkey and Egypt, are expected to be popular again with UK holidaymakers this summer.