Business

Currency exchange rate woe for UK holidaymakers

Wine and sunset
Image caption The cost of a drink on holiday could be higher than some UK holidaymakers expect

At this time of year, many people are thinking of stretching out on a sunny beach on holiday.

But for UK holidaymakers, a beer in France can cost them more than £5.

According to pintprice.com, France finds itself at number nine in a top 10 of 208 countries around the world for the most expensive café beer.

Exchange rates can have a huge impact on people's holiday costs and decisions.

Budgeting

The weak pound may continue to be good news for exporters, but it is not so good for those planning a trip overseas.

With the UK seen as being in much the same economic boat as mainland Europe and the United States, currency specialists expect little change for travellers when it comes to buying the euro or the dollar to travel to mainland Europe or across the Atlantic.

Sterling has traded in what currency experts like to call a "tight range" for a couple of years.

Gone are the days when UK travellers got 1.5 euro for £1.

Taking exchange fees and costs into account, few will get much more than a single euro for every pound in their pocket - no wonder that beer is so expensive.

As long as the Bank of England leaves the bank rate at 0.5%, the financial returns from holding sterling remain so poor that nobody in the markets wants to sit on it for very long.

Most in the foreign exchanges expect sterling to keep lying low for at least another year.

Commission

Mark O' Sullivan, of Currencies Direct, says there are a handful of holiday destinations where the currency has moved in UK travellers' favour.

Image caption The US currency tends to be in a close range with the UK's currency

"Where the pound has seen the most value has been in emerging market currencies. Despite the problems in the Middle East and north Africa, the Egyptian pound and the Turkish lira still represent great value for the pound," he says.

"In both cases the pound has risen 20%. Going further east, if you take something like the Thai Baht, you can still get about 50 to the pound. That has hardly changed in two years. So if you are looking to take your holidays over there, it is a great time to go."

Experts advise holidaymakers to shop around and check the rates on offer.

If travellers are stocking up on cash to take away, many High Street exchange shops offer "commission free" deals, but these may not always work out the cheapest.

A few credit cards, such as one from the Post Office, levy no charges for taking out cash abroad.

Experts also alert travellers to merchants overseas who tries to charge in sterling, rather than in the local currency. The exchange rate offered may well be inferior to that charged by a card issuer.

Competition

Noel Josephidis, of the Association of Independent Travel Agents, says that he has noticed that many traditional destinations within the Eurozone have upped their game.

"Operators in France, Spain and Greece found themselves out of favour, and knew that British visitors were staying away because of the exchange rate," he says.

But it has now galvanized hotels and other suppliers to offer much better value. Travel is very much a fashion business."

While Turkey is 20% cheaper in currency terms, Mr Josephidis says many people are still not choosing to go there this year.

It may simply be that more people are plumping for a "staycation" and decide to book a holiday at home.

Operators may not want to cut prices again, but there may well be some late bargains for travellers who do not mind where they go - as long as their pound goes a long way when they get there.

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