Britain’s consumers rushed to buy dollars and euros for their holidays as the value of sterling dropped after Theresa May’s commitment to a hard Brexit last week.
Money-changing companies reported a surge in people buying foreign currency as details of the prime minister’s speech on Brexit emerged, and the value of sterling fell steeply against the dollar.
The pound recovered later in the week, making up for the dip, but caused jitters among consumers.
Post Office Travel Money, which accounts for a quarter of UK consumer foreign-exchange transactions, said it dealt with almost two-thirds more transactions in the first three days of the week compared to the same time last year. FairFX, which specialises in prepaid currency cards, said transactions surged last Sunday, when parts of the prime minister’s speech emerged.
Analysts say they expect further fluctuations in the value of the pound in coming months as further details of Brexit emerge and markets react. British tourists going to Europe get 11% fewer euros for their pounds now compared with last year, and 13% fewer to the dollar, said FairFX, which advises consumers to buy now and lock in on current prices to avoid possible future dips.
“The value of the pound fluctuated significantly in 2016 with political events around the world such as the Brexit vote and the US election being contributing factors. As uncertainty continues to surround Brexit, 2017 could see continued volatility,” said chief executive Ian Strafford-Taylor.
However, consumers are advised not to overreact to daily currency fluctuations. Andrew Brown of Post Office Travel Money said changing £500 for a short break, for example, would only result in marginal differences with current currency movements.
When going for holidays longer than a weekend where larger amounts of money are needed however, the fluctuations will noticeably affect consumers, he said.
Exchanging money in airports, where rates are frequently at their least competitive, should be avoided, said Kevin Mountford of price comparison site MoneySuperMarket. “If it is from a tourist perspective, you have got to go with the flow but the last thing you do is wait until you get to the airport,” he said.
