Pound sterling falls below euro

Against US dollar, the pound is 30 per cent lower than its average

The foreign exchange rate is pummeling the pound at the moment (Rex)

The latest slump in the value of the pound means some travellers flying from Britain today are paying more than £1 for each euro - and a McDonald's coffee in Switzerland will cost over £4.

After sterling fell in overnight trading in Asia, Moneycorp bureaux de change at Gatwick airport are charging £102.69 for €100 — valuing each pound at just 97.4 euro cents.

The inter-bank rate was around €1.14 for £1, and $1.20. Research by The Independent on the value of the pound over the past 15 years shows an average of €1.38 and $1.70. Against the euro, the pound is 17 per cent below the average, while against the dollar the present value is 30 per cent down.

Many other currencies worldwide, including those of China, the UAE and much of Latin America, are linked to the dollar.

The slump comes during the peak booking season for summer holidays. Many tour operators and airlines are “hedged” for foreign currency, which means their costs are protected against fall in the pound. But as those positions unwind, travellers face sharply increased prices.

The major costs in aviation, including aircraft leases and fuel, are denominated in US dollars, while mainstream holiday firms are also exposed to many costs in euros.

Marcello Mastioni, vice president and managing director of Europe, Middle East and Africa for the vacation rental firm HomeAway, said the fall in the value of the pound could mean up to one-third more British families staying at home.

He said: “We think there may be a change in mix between international and domestic trips. According to our survey about 20 per cent of UK travellers think they will do more domestic vacations than international vacations this year, and this figure for families is up to 34 per cent.

Against the Swiss franc, the inter-bank rate is CHF1.22 to £1 — pushing the price of a regular cappuccino at McDonald’s above £4.