On the UK’s big summer holiday getaway weekend, airports have offered very poor rates for sterling after difficult week on forex markets.
British holidaymakers heading to Europe for this weekend’s big getaway are being offered what may be the worst ever foreign exchange rates at British airports – in one case, just 88 euro cents for every pound they hand over.
The 88 euro cents offered at Cardiff airport followed a difficult week for the pound on the foreign exchange markets, where sterling fell to its lowest level for eight months to €1.11.
Travellers flying out of Gatwick, Luton and Birmingham on Friday were all being offered less than a euro for each pound, unless they had pre-booked their currency.
As thousands of parents who had been waiting for the start of the school holidays spent yesterday packing suitcases, the pound completed a terrible week falling to its lowest level for eight months – to €1.11.
It means cycling fans using their credit cards at the denouement of the Tour de France in Paris on Sunday will get an exchange rate of around €1.08 once the credit card firm has added its commission.
But it also allowed the airport foreign currency providers to slash rates – on what was set to the busiest day ever at British airports. The Forexchange at Cardiff airport on Friday cut its walk-up rate to the point that a pound would buy just 88 euro cents. Experts said that was possibly the worst euro exchange rate ever seen at any UK airport – traditionally the most expensive places to buy foreign currency.
The Travelex foreign exchange booths at Heathrow, Manchester and Glasgow were offering almost exactly €1 to the pound. The foreign exchange industry has blamed higher staff and property costs at airports for the poor exchange rates.
Ian Strafford-Taylor, chief executive of the online currency firm FairFX, said political and economic uncertainty since the vote for Brexit had weakened the pound, and British holidaymakers are now paying the price.
“Time and time again, we have seen how the pound has been subject to volatility since the Brexit referendum and how some currency providers look to be taking advantage of it. Our analysis of airport rates today shows that consumers are routinely being offered as low as 0.96 euros to the pound, well below parity. It couldn’t come at a worse time just as the nation heads off for the great summer holiday getaway.”
He said the pound’s decline since the referendum means that European hotels, meals out and pedalo hires are set to cost British holidaymakers 7% more than they did this time last year, and 21% more than in the summer of 2015. This is before any local price increases are included.
In the first week of the school summer holidays in 2015, Britons travelling to Europe received more than €1.41 for each pound.
Sterling’s latest plunge against the euro has been blamed on Mario Draghi, head of the European Central Bank, who pushed the euro higher on the foreign exchange markets after saying that his governing council could soon start slowing the amount of money the bank will inject into the European economy.
While the euro’s rally makes travelling to the UK cheaper for visitors using the euro, it makes it more expensive for British travellers.
Economists at Berenberg said: “Sterling depreciated in the run-up to the Brexit vote, despite the continued economic expansion. When the UK voted for Brexit on 23 June last year, sterling took another big leg down.” Since then sterling has recovered some ground.
The fluctuations mean that anyone who reserved a hotel room as recently as May will pay 6% more this week than if they had paid upfront. The pound has fallen 2% this week alone, and only remains above last November’s low of €1.10.
According to Derek Halpenny, European head of global markets research at financial firm MUFG, the pound over the last five trading days “is by some distance the worst performing” of the 10 most heavily traded currencies in the world.