Banking Faq Locations Sterling

We're all going on a summer holiday: No more worries after finding the very ...

It’s hard to believe, but we are already heading for the start of the school summer holiday season. The first Scottish schools break up at the end of this week, with some in England and Wales starting a fortnight later. But families heading overseas on holiday to many popular destinations will find their pound buys a lot less than last year.

Sterling has slumped by five per cent against the euro since last June, 18 per cent against the Swiss franc and ten per cent against the Australian dollar. Brighter notes are Turkey, where sterling has gained 12 per cent against the lira, and the US, where the pound has clawed back seven per cent of its value compared with the dollar.

With the pound so wobbly, it is essential to plan your spending overseas to make sure as little as possible of your valuable holiday money is gobbled up in unnecessary foreign exchange charges or banking fees.

For many families, the holiday begins with a trip to the local bureau de change to pick up foreign currency.

James Yerkess, head of travel money at Marks & Spencer, says: ‘Collecting a wallet full of notes gives you the first taste of your summer holiday.’

Sarah Munro, head of travel money at the Post Office, says: ‘Sales of foreign currency is still our biggest business. Most travellers still want currency to take away with them.’

It really does pay to leave plenty of time to get your currency. Leaving it until the last minute and visiting an airport exchange booth will leave you with the worst deal. Instead, take the time to check out the rates on offer, both on the High Street and online.

Yerkess says: ‘There is a lot of regional variation and some companies have different exchange rates at different branches in the same town on the same day.’

Beware of big posters proclaiming that a currency deal is free of commission. This may be used to hide a poor rate – it is better to compare the total sterling cost of buying a set sum of foreign currency.

And think how you are going to pay for your holiday cash. Some banks charge if you use your debit card to buy currency from a rival business, even if you are billed in sterling. These include Barclays and Co-operative (two per cent), and Lloyds, NatWest and Santander (1.5 per cent).

If you have one of these cards, it will be cheaper to withdraw cash from your account and use this to pay for the currency.

Sterling to US Dollar and Euro exchange rates – The Pound declined ...

By Adam Solomon

The Pound declined to the lowest level against the U.S Dollar in two months, while the UK currency also came under renewed selling pressure versus the majority of the 16 most actively traded currencies. A report from the Office of National Statistics showed that UK retail sales dropped more-than-expected in May, led by higher fuel costs and ongoing concerns about the labour market.

Consumer spending rose in April, which coincided with extra bank holidays and the Royal wedding. However, sales fell 1.4% in May, wiping out the 1.1% gain the previous month. The Pound declined and bonds rose after the report, as UK consumers are being squeezed from rising inflation outpacing wage growth, while consumer sentiment is being undermined by government spending cuts.

The Bank of England governor Mervyn King said earlier this week that the economy is undergoing rebalancing that will take several years, as he justified the Bank’s decision to keep interest rates on hold to aid the recovery. The Central Bank’s credibility has been called into question this year with UK inflation accelerating at the fastest pace in two years and likely to breach 5% over the coming months.

The Pound traded as low as 1.6106 against the Dollar yesterday, as the UK currency struggled and demand for lower-yielding currencies increased. The Yen and Swiss Franc also made widespread gains with the latter rising to a fresh record high against the Euro, as escalating concern over sovereign debt in the Euro-zone prompted traders to seek the security of so-called safe haven assets.

The monthly drop in UK retail sales was the biggest since January 2010 and excluding fuel, sales fell 1.6% on the month and were unchanged on the year. Reports earlier this week also showed that unemployment claims surged to the highest level in almost two years in May and wage growth was an annual 1.8% in the three months through April.

In his Mansion House speech on Wednesday, Mervyn King said that if the bank raised interest rates to combat inflation, it would have led to a weaker economy and added that a rate increase wouldn’t have shielded consumers rising oil prices. King said that an increase at this stage “would have meant a weaker recovery or even further falls in output and a risk of inflation falling well below the target in the medium term.”

The Pound has weakened significantly against the majors, as investors continued to scale back expectations that the Bank of England won’t raise interest rates before May 2012. As recently as February, investors were anticipating an increase in UK borrowing costs in May this year. The UK currency will encounter strong support in the region of 1.60 against the Dollar, but an improvement in risk appetite could see the market bounce higher once-more.

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Banking Principles and Practice: The foreign division

Britain and the sterling area, from devaluation to convertibility in the 1950s