Sunday, April 14, 2024

Aspects relating to the rise of the British Pound

The soaring pound is making holidays much cheaper for the British. This is surely something many British tourists are grateful for because it is one of the best times to schedule a holiday. With the rising pound British tourists are availing of holidays to 19 Eurozone countries that are nearly 12% cheaper than what they cost last year. The rising pound is also being supported with the fall in the Euro. The Euro has in fact fallen below 70p on the 16th of July 2015. This was the first time in eight years that this happened.

Since the average Briton typically takes some £450 of spending money, it basically means that there is about £50 being saved thanks to the currency cost. Spain is the most popular tourist destination for British tourists, with France and Italy being favourites too.

Those tourists who were planning to travel to Turkey should make the most of it right now. This is because one will be able to save even more since the Turkish lira has fallen victim to the political uncertainty that there is in the country and also because of their neighbour, Syria. Tourists heading to Turkey will be able to spend some 20% less than what they would have spent in the same time last year.

Those who are considering going to Ukraine should also pack their bags and head there this summer as it can be a great bargain. Since the Ukrainian currency, the Hryvnia weakened considerably against the sterling because of the sanctions that were imposed by Russia, Ukraine is a must-go this summer if you want to save a great deal of money.

After outlining some of the best countries to visit this summer, it may be worth pointing out some of the less advantageous ones. With the strengthening Swiss franc and US dollar, holidays to areas such as Geneva or Orlando are going to cost more from a currency perspective.

Following the Central Bank’s decision last January to scrap the three-year cap on the Swiss franc, this currency had a tumultuous year as it surged to parity against the euro.

The rising British pound is proving to be great news to travellers, but it certainly is not so favourable for exporters. Now UK exports are going to be more expensive and so sales volumes will suffer. According to the British Chamber of Commerce, the UK will not be hitting its target of £1tn worth of exports by the year 2020, and it will fail to do so by some 14 years.

Considering that the UK is the second biggest exporter of services in the world, just after the US, this is something worth considering. The BCC believes that besides the usual three countries, namely, Germany, France and the USA, there are also the United Arab Emirates and China as being possibly new service hot spots for the UK over the next five years.

The relative strength of the pound might end up dampening the Bank of England’s keenness for an early interest rate rise. Considering the implications this will have on exports, it is critical to take such a decision very carefully.

Elliot Preece
Elliot Preece
Elliot is the Editor at ABCMoney. He manages a team that writes and contributes to many leading publications across a number of industries.

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