Following the plummeting value of the pound, holiday makers are flooding money exchange outlets to stockpiling Euros for their holiday money amid fears of further devaluation of the pound. The possibility of Britain pulling out of the European Union has lead to a decrease in the purchasing power of the pound in other countries.
As a result, currency brokers such as Asda Money and Hifx have received overwhelming orders to supply holiday cash to families that are speculating the possibility of costs rising before Easter or summer breaks.
In comparison to the end of February 2015, 43% more Euros got exchanged by Britain’s largest currency seller, The Post Office, in the last few weeks alone. According to The Post Office, it has been selling twice the average amount of Euros for the month of March.
According to Darren Kilner, from FairFX, the past weeks have been busier than usual as customers are concerned that the EU referendum might have an impact on their holiday plans.
Just a few days ago, the Sterling pound dipped against the dollar to its lowest point since the 2009 financial crisis. One year ago, one pound exchanged for $1.51, but the devaluation has brought the exchange rate down to $1.35 per pound.
To the Euro, the pound has depreciated by 9%, and it is now trading at £1 for €1.23; a drop from €1.40 in July last year with experts predicting the collapse of the currency as the EU referendum takes place on June 23.
HSBC estimated the pound could fall further by 20% should Britain vote to leave the EU. From another point of view, USB says the pound could eventually equalize with Euro in terms of value. According to Panmure Gordon stock brokerage’s financial commentator David Buik, talk of the pound falling to a point of parity with the Euro is a bit extreme; however, it is possible that an exchange rate of €1.15 will be reached. He further added that he expected the pound to experience a sharp rise in the future.
According to a panel of neutral experts, it is advisable to visit a money exchange and buy some of your holiday money at the moment.
According to Justin Urquhart, founder of 7 Investment Management, the uncertainty of the British currency will continue to worsen until the countries stand in the EU referendum id established. He added that since it is not possible to know which way a currency will go, it would be advisable to get at least half of your holiday money now. He further stated that he could not see why the pound should gain value.
David Black, the founder of DJB Research; a financial research firm, says the currency’s exchange rate is going to fluctuate in the coming months and advises holidaymakers to estimate how much they are willing to spend and get at least half of the money now.
However, the director of Wealth Club investments, Ben Yearsley advises that should Britain gesture it wants to leave the EU the pound could further depreciate with the reverse also being the case. Thus, he does not rush to get the holiday money just yet.