Those traveling abroad will get less for their money as the UK’s currency took a further dive this week. Sterling sank at its lowest level since the start of the pandemic on Tuesday, dropping below $1.20 before partly recovering on Wednesday. The pound is also hovering near a thirteen-month low against the euro.
With the peak summer holiday season 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 slump in the value of the pound may ensure their money does not go as far as they’d hoped.
Jane Foley, head of foreign exchange strategy at the Dutch bank Rabobank, said the weakness of the pound will “add to the gloom” for British tourists who are already facing the prospect of travel chaos, with many UK airports canceling or delaying flights in recent months.
Ms Foley told the BBC: “If you’re going to the Eurozone or the United States, you’re going to be able to purchase less.
“When we look at the dollar, it’s very strong, so holidaymakers going to the US are really going to see the weakness.”
The weakness of the pound has been related to a number of factors, including political uncertainty and a potential trade conflict with the European Union which has prompted “fears about growth”, Ms Foley explained.
Fears have grown over the strength of the UK economy since figures showed it shrank again in April for the second month in a row, taking a toll on businesses in the face of rising prices.
Sterling fell to its lowest level since November 2020 in April amid gloomy economic data which showed retail sales dropped by 14 percent as Britons struggled with the cost of living crisis.
Inflation also reached a 30-year high in recent months, pushing up prices and denting consumer confidence as families cut spending money amid surging costs.
Uncertainty has been rife over how fast the Bank of England can tighten policy this year to tame rising inflation without putting more pressure on the economy.
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The problem was particularly bad during Easter and last month’s half-term school holiday, with British Airways, TUI and Easyjet having apologized for the disruption.
The government told UK airlines this week to cancel flights they can’t deliver this summer to stop a rerun of May’s travel chaos, raising travellers’ concerns that their trips may be axed.
Planned rail strikes have also threatened to scupper some people’s plans, with more than 40,000 RMT Union members from Network Rail and 13 train operators set to walk out on June 21, 23 and 25.
It is likely that services across the week will be affected as thousands plan to travel for Glastonbury Festival from June 22.
Brits opting for a staycation may also be put off from holidaying by car with sky-high petrol prices driving up costs.