Money

What will happen to the pound after Brexit and should you buy euros now?


HOLIDAYMAKERS heading off in search of some sun are probably wondering when is the best time to buy holiday money – now or after Brexit?

The UK is leaving the European Union on Friday – January 31 – and it’s likely to lead to fluctuations in the value of the pound.

 We explain what could happen to the pound after Brexit

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We explain what could happen to the pound after BrexitCredit: Getty – Contributor

The pound has remained fairly steady against the euro and dollar so far this week, but this could change come Friday.

At the time of writing, £1 would buy you about $1.30 and €1.18.

In comparison to pre-referendum levels in June 2016, Brits could then get $1.588 or €1.4271 for £1.

Overall, the pound ended last year roughly 2 per cent higher against the dollar.

But how do you make sure you get the most currency for your pounds? Below we explain everything you need to know.

What will happen to the pound after Brexit?

There are many factors that can affect the value of the pound, particularly decisions surrounding Brexit.

The pound has strengthened against major currencies from a low point in August, and against the euro since the general election, said Travelex.

But “it’s impossible” to know what will happen to exchange rates on Friday, added Salman Haqqi, from money.co.uk.

Yet there are some key events you can keep an eye on to make sure you’re prepared for both rises and drops.

How to get the best deal on travel money

BELOW are some tips from Salman Haqqi, personal finance expert at Money.co.uk on how to get a good deal on travel cash.

  • Focus on the overall cost: Don’t just look for the highest exchange rate, because you could find a lower rate is better overall if commission and delivery charges are excluded
  • Don’t use your credit card: Use your debit card or simply swap your sterling cash into your chosen currency to avoid excessive credit card charges
  • Avoid cheap tricks: Don’t be swayed by companies offering 0 per cent commission on travel money as this will apply to almost every travel money company
  • Prepare in advance: Shop around using tools like MoneySavingExpert’s TravelMoneyMax or Money.co.uk for travel money well before your trip so you can compare deals and make the most of free delivery options which take longer to arrive

Ian Strafford-Taylor, of international money specialist Equals, said: “The UK is leaving with a deal which offers some clarity on the future relationship with the EU.

“However Brexit is an unprecedented event so after Friday the pound will be entering unchartered territory which makes it vulnerable to further fluctuations.

“What happens over the coming days and weeks in terms of trade deals with other countries could have huge implications on the future strength of the pound.”

Meanwhile, Michael Brown, senior market analyst at Caxton, said the key negotiations likely to affect the pound are those between the UK and the EU.

He said: “The ambitious, 11-month timetable for the agreement of a comprehensive free trade agreement means a World Trade Organization (WTO) exit remains a real possibility, which may cap some of sterling’s gains.

“Signs of a free trade agreement being agreed would strengthen the pound, while increasing risk of a WTO departure would see sterling face headwinds.”

Should you buy euros and other holiday money now?

The currency experts said the best way for holidaymakers to get the most for their money is to keep a close eye on the pound over the next few days.

Once you’re happy, you can lock in the rate on a pre-paid travel card as there’s no guarantee it will get better, said Mr Strafford-Taylor.

Alternatively, monitor exchange rates and use a tracker to alert you to good rates you can take advantage of.

Alana Parsons, travel money expert at Caxton reckons another good way to make sure you get the top rates is buying half of your money now and the other half after Brexit.

That way, you won’t feel so bitter if the pound weakens after Brexit because you would have made the most of top rates when they were available.

To get a good deal, do you research and aim to find the best exchange rate with the lowest additional charges, like delivery and commission fees, added Mr Haqqi.

If you decide to buy now, another trick is to find a bureaux de change that lets you order now and sell it back later, often within three to 45 days.

Not all of them provide this service but it will give you an opportunity to lock into to current rates and change your mind later if things dramatically improve.

You need to watch out though because sometimes you’ll have to pay a fee to sell them back, which will eat into any cash you save by swapping to a better exchange rate.

The pound jumped against the dollar and euro in the biggest three year rally in December as Boris won the election.

It came after it took a tumble a few months earlier when Brexit talks hit a “standstill”.

Last year, sterling hit a near ten-year low against the euro as No Deal Brexit loomed.

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