Families who rush to buy their summer holiday travel money at today’s top rates could miss out on extra cash, experts warn.
The pound has jumped against the euro and the U.S. dollar since Theresa May announced a snap General Election two weeks ago.
Economists say this is because currency traders expect a big Conservative win, which could put Britain in a stronger position to negotiate Brexit with the EU.
On the day the Prime Minister announced the June election, the pound jumped by 1.6 per cent to $1.28 — its highest level since December. It rose more than 1 per cent against the euro to €1.19.
Boost: The pound has jumped against the euro and the U.S. dollar since Theresa May announced a snap General Election two weeks ago
Sainsbury’s Bank and M&S Bank say the number of customers buying currency soared as a result.
The Post Office says online currency sales rocketed by 147 per cent in the two days after Theresa May’s announcement, compared to the same period last year.
Each pound is now worth $1.29 or €1.18 — up from just $1.22 or €1.10 last October. That means you can get an extra $35 or €40 for every £500 you exchange versus the miserable deals on offer late last year.
But rates are still well below the levels they reached before the EU referendum last June, when you got $1.48 or €1.30 for every pound.
Now experts are saying the pound could rise further in July and August if the Tories run away with the election.
So the best moment to buy your holiday money will depend on whether you are travelling before or after June 8 — and on what you expect the result to be.
BUY NOW IF YOU’RE GOING ABROAD BEFORE JUNE
If you are planning a trip to Europe or the U.S. before the election, experts say buy now.
The pound is stronger after rising against the euro a fortnight ago, but rates could swing the other way again.
Last week, for instance, the pound fell back against the euro following news that independent Centrist Emmanuel Macron had won first place ahead of far-Right leader Marine Le Pen in the first round of the French presidential election.
Adrian Lowcock, investment director at Architas, says: ‘If you are going away before the UK election, now is as good a time as any.
‘As you get closer to the French election next week, if a victory for Macron becomes clearer, you may see the euro go higher.
‘Then as the French election is put behind us, and the uncertainty disappears, the focus will shift to the European economy, which looks very positive — so you could pay even more for your euros.’
Peaking? If you are planning a trip to Europe or the U.S. before the election, experts say buy now
Christopher Turner, head of foreign exchange at bank ING, says: ‘Sterling buys you around €1.18. That’s not bad given that the exchange rate has been between €1.13 and €1.20 this year.’
Since the Prime Minister’s election announcement the pound has risen to $1.29. Meanwhile, in the U.S., President Donald Trump has been accused of ‘talking down the dollar’ in recent weeks after saying it was ‘getting too strong’ — which has given British holidaymakers an unexpected boost.
So, if you’re going to the States in the next five weeks — before Britons head to the polls — there may be little benefit in waiting.
David Buik, market commentator for Panmure Gordon & Co, says: ‘I would buy half your dollars now and the other half just before you go.
President Trump has now been in office for more than 100 days and it is becoming apparent that he has not been as effective as he thought he would be.’
If you think Theresa May will keep her job, it could be worth waiting until after the election
WAIT FOR TRIPS IN JULY OR AUGUST
If you are confident Theresa May will keep her job, it could be worth biding your time until after the election.
The pound is expected to rise again if there is a landslide victory for the Tories. But if Labour wins, if there is another Coalition or the Tories lose some seats, the uncertainty could hit sterling hard.
‘In theory, if there is a strong Conservative victory, the markets should react positively and the pound should strengthen,’ Mr Lowcock says. ‘This is because Europe could interpret a strong Tory win as a sign we are in a stronger position for Brexit negotiations. Of course, this also gives Europe more clarity on Brexit which could result in a stronger euro.’
Justin Urquhart Stewart, co-founder of Seven Investment Management, says: ‘If Mrs May wins her election with a significant majority, I think you may well see a stronger pound as she will feel she has a stronger mandate to get her way with her policies both in the UK and with the EU.
‘Even then, I would split my money and buy some just after June 8 and the rest in, say, late July, to spread the risk.’
A big Conservative victory would not only boost the pound against the euro but also against the dollar, the Japanese Yen and other major currencies.
Mr Urquhart Stewart says: ‘I would wait to see if President Trump can get any of his policies through, too. It may well be he has problems, which would weaken the dollar. So, if you’re going away in June, July or August, I would wait until closer to the time to buy your money.’
However, if the U.S. economy strengthens or it hikes rates, the dollar could rise again — so you will be taking a risk, says Danny Cox, of financial advisers Hargreaves Lansdown.