Tourist pound now down at close to just one dollar

By Brian Milligan, BBC Personal Finance reporter

14 December 2018

Travellers at some UK airports are barely being offered one US dollar for each of their pounds, following a month of Brexit uncertainty. Those exchanging pounds at the UK's biggest airport, Heathrow, are finding as little as $1.05 coming back across the counter. Since 16 April the pound has fallen by 11.77% against the US dollar. In places, sterling buys less than a euro, with tourists being offered just 92 cents for every pound. Against the dollar, the pound is now at its weakest since April 2017, although it has recovered slightly since Theresa May won her vote of confidence. In March 2008 the pound was briefly worth more than $2.00.

While there are some other factors behind the drop in the pound's value, such as the receding chances of an interest rate rise, most experts accept that the politics of Brexit are chiefly to blame. "Over the last couple of months... we've seen several developments in Brexit negotiations, MP resignations and more recently a leadership challenge which have all sparked significant turbulence for the pound," said Ian Strafford-Taylor, the chief executive of currency traders FairFx. Changing money at a port or airport is the most expensive way of doing so, and there are usually much cheaper deals online. The best deal on offer on Friday was $1.23 for one pound.

Tourist rates are also more expensive than official exchange rates, as they take into account the costs of providing bureaux de change. But the weakness of the pound leaves anyone thinking of going abroad next year with a dilemma: Should they buy their currency now, or wait, in the hope that the pound will recover? "It's impossible to predict how foreign exchange rates will change in future, especially with volatility around Brexit and other economic events," said Nathan Best, UK commercial director at Travelex. "The best customers can do is keep an eye on rates and convert at a rate they feel comfortable with. One option for customers who are wary of foreign currency volatility is to split their currency purchases to reduce risk. Customers can choose to buy some of their currency before their trip with a preferred rate, and then buy the remaining currency closer to, or during, the trip."

[One thing some people tend to forget is that the value of the pound against the dollar – and presumably other currencies – has NEVER recovered from the drop it experienced when the Brexit Referendum results came out. That alone, not counting everything else Brexit has and will do to the economy, has cost the country and its taxpayers billions of pounds and, as we’re constantly reminded, we haven’t even left yet. Of course some shrug this off as a price they’re willing to pay. We’ll see what else they’ll put up with from next March. Unfortunately the rest of us will have to put up with it too….]