The pound is now as strong against the euro as it has been since the UK voted to leave the EU, giving hope to British holidaymakers they might get more bang for their buck this summer.
Theresa May’s decision to call an early general election this week gave a shot in the arm to sterling, helping the currency to make gains on 120 others. Currency specialists FairFx added that the pound had hit a six-month high against the US dollar.
At its nadir in November last year, the pound was worth just €1.10, but has now jumped to €1.19. It means that British holidaymakers on the continent will gain an extra €90 for every £1,000 exchanged.
The prospect of a general election galvanised the markets somewhat, allowing the pound to strengthen by around three per cent on the currencies of countries including Canada, Argentina and Mexico, and around two per cent on 115 more, including Japan, Croatia and Russia.
“Tuesday’s news of a snap general election has driven improvements in the pound,” said Ian Strafford-Taylor of FairFX. “This is finally good news for customers looking to buy currency whether they’re going on holiday or planning any international purchases such as buying a property abroad or planning an overseas wedding or gap year.
“Uncertainty around political and economic events can have a negative impact on the pound and this is something we have seen over the past year since the Brexit referendum.”
The pound has experienced a rollercoaster since last June, rising and falling with each news story regarding Brexit negotiations. However, according to the Post Office, appetite for travel money is still healthy. A spokesperson said online currency sales had risen by 47 per cent so far in 2017 compared to the same period last year.
It issued research on its holiday money sales on Tuesday morning only to revise it in the wake of the election news.
The fastest growing currencies so far this year
- Indonesian rupiah +60%
- Turkish lira +46%
- Omani rial +42%
- Kenyan shilling +36%
- Bulgarian lev +33%
- Malaysian ringgit +33%
- Polish zloty +31%
- Qatar riyal +24%
- Costa Rican colon +22%
- Hungarian forint +18%
“Sterling’s recovery comes at a good time as the holiday season gets underway in earnest but it also true that there was no sign of a slowdown in currency sales in the first three months of the year when the pound was weaker,” said Andrew Brown of the Post Office.
The Post Office explained that though the pound had experienced a bounce this week, it was still down on nearly all currencies compared to a year ago. The Turkish lira and the Malaysian ringgit were the only two currencies to be down on the pound compared to April 2016.
But when compared to six months ago, the pound has risen on a number of key currencies, including the euro.