Money's shot - one pound to the dollar? What can you do?

4 March 2010

If you snapped up flights to the US during the Christmas sales, here's some news that's grimmer than a wet day in Doncaster - the pound is taking one hell of a beating from the dollar right now. The reasons are many and varied, but the net effect is that if you try and exchange your money anytime soon, you're going to get screwed over:

Bitterwallet - sterling takes a tumble against the dollar

From a high of nearly $1.65 to the pound in January, sterling dropped below $1.60 at the beginning of February, and on Monday slipped below $1.49 - suddenly you're getting $15 less per £100 compared to six weeks ago. According to business papers, key causes include the upcoming UK elections, continued economic strife and investors scrutinising the European market closer than ever since Greece blew its financial load.

That's not the worst of it. Some analysts think the UK is carrying too debt and need to reduce it immediately. Analysts being analysts, however, couldn't agree on anything if their faces were on fire; Swiss bank UBS AG has warned the pound could fall to $1.05 or lower, if the country tries to cut its debt too quickly. They're not the only ones, sadly - the Financial Times compares sterling's current problems to the situation in 1985, when the pound nearly reached parity with the dollar. Whaaaaat!

Of course it may not happen, but even the best case scenario doesn't see sterling strengthening against the dollar anytime soon. So if you're travelling to the States soon, what can you do about it?

If you're a very regular visitor to the US, you're probably already following the exchange rates and buying currency through the likes of XE.com. What if yours is a one-off visit in a couple of months? It could be worth taking a punt on a currency exchange card from the likes of FairFX. It's a Mastercard that lets you buy currency at today's exchange rate for use later on; the exchange rates are generous - FairFX beats the likes of Tesco hands down - and it's free if you add over £500 to the card. Other cards are available for free with a lower spend, but we mention FairFX because there's Quidco available too. The only downside - there's a $2 transaction fee for every cash withdrawl.

TOPICS:   Travel   Government

10 comments

  • Nobby
    I remember February '85, it dropped to about £1.00 = $1.06 for a while. It almost broke the parity barrier.
  • Mark P.
    What the cunting fuck is a 'withdrawl'?
  • dasher
    Only problem with these cards like FairFX i beleive that they charge you a transaction fee each time you use it. And if there is any money left on the card there is a monthly charge. Personally i would stay clear of them - too many clauses, unlike CASH!! Things are looking up, $1.511 to the £ i last looked!! Eeek!
  • dududu
    Everytime one of these Anal-yst say sth - most of the time they are wrong. So they can do Anal on each other!
  • Gadget 4.
    Might be a good time to invest in the dollar if parity is likely anytime this year.
  • Gunn
    Not to the mention the Euro, how long before that 1:1
  • Mark M.
    For someone like me who has a villa in florida, it is a mixed blessing. Our mortgage was sorted out when the rate was £1 = £1.90 and is paid in sterling, so that cost is fixed. For bookings from the US, we benefit as the $ is worth so much when exchanged to £. However, the UK visitors may be put off a trip as they'll get hardly anything for their spends
  • zeedy
    It wasn't that great a rate in Jan 2009 when we went to Florida. We still ate out for practically nothing. The supermarkets were actually dearer to shop in than to eat out. I love their all you can eat buffets. They're fuck all like the shite at Pizza Hut or your local Asian diner.
  • Nobby
    > We still ate out for practically nothing. Yeah, pick a restaurant run by fat people, and they cannot chase you when you do a runner.
  • andyofyarm
    The explanation for the weak pound is not complex or hard to understand...Britain is fucked,that's it.

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