Those traveling abroad will get less for their money as the UK currency has plunged again this week. The pound fell to its lowest level since the start of the pandemic on Tuesday, dropping below $1.20 before partially recovering on Wednesday. The pound is also hovering near a 13-month low against the euro.
As the high summer holiday season is about to kick off, many Britons are planning their first trips abroad after more than two years of Covid restrictions.
However, for those visiting the Eurozone or the United States, the fall in the value of the pound may guarantee that their money will not go as far as they hoped.
Jane Foley, head of foreign exchange strategy at Dutch bank Rabobank, said the pound’s weakness will “add to the gloom” for British tourists who already face the prospect of travel chaos, many airports British people canceling or delaying flights lately. month.
Ms Foley told the BBC: “If you go to the euro zone or the United States, you will be able to buy less.
“When you look at the dollar, it’s very strong, so vacationers going to the United States are really going to see the weakness.”
The pound’s weakness has been linked to a number of factors, including political uncertainty and a potential trade dispute with the European Union which has sparked “growth fears”, Ms Foley explained.
Fears have grown over the strength of Britain’s economy since figures showed it shrank again in April for the second month in a row, hurting businesses in the face of rising prices.
The pound fell to its lowest level since November 2020 in April amid dismal economic data that showed retail sales fell 14% as Britons battled the cost of living crisis.
Inflation has also hit a 30-year high in recent months, pushing up prices and undermining consumer confidence as families cut spending amid rising costs.
Uncertainty reigns over how quickly the Bank of England can tighten policy this year to rein in rising inflation without putting further pressure on the economy.
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The problem was particularly serious at Easter and during the mid-term school holidays last month, with British Airways, TUI and Easyjet apologizing for the disruption.
The government this week told British airlines to cancel flights they cannot deliver this summer to stop a repeat of May’s travel chaos, raising fears among travelers that their journeys could be cut short.
Planned rail strikes have also threatened to sabotage some people’s plans, with more than 40,000 members of Network Rail’s RMT union and 13 train operators set to leave on June 21, 23 and 25.
Services throughout the week are likely to be affected as thousands of people plan to travel for the Glastonbury Festival from June 22.
Britons opting for a staycation may also be deterred from a driving holiday, with sky-high petrol prices driving up costs.