Will your holiday be hit by Brexit? What can you do?

Could the European referendum make your holiday much more expensive? Much of the talk surrounding the referendum on 23rd June, has been about the potential long-term costs of any decision. However, there's a much more immediate impact you need to be aware of - the result could make your holiday much pricier this summer.

Regardless of the long-term implication of a vote to stay in Europe or opt for Brexit, in the immediate aftermath of the result, we're likely to see a major change to the value of the pound against the euro. If we don't judge it right, and buy our holiday money at the most sensible time, we could end up spending hundreds of pounds extra on a summer holiday.

What will happen to the pound?

The pound has already had a torrid time of 2016, as the currency markets like certainty, so the forthcoming vote has already caused an enormous amount of weakness. The pound started the year at around €1.35 and on the day the Referendum was confirmed it was around €1.29. Right now it is at €1.27. It has had less effect on the dollar – it started the year at $1.47 and is now at $1.46.

According to Consumer intelligence, a vote for Brexit on 23 June could send the pound plunging to a new low of €1.08. It could also weaken the pound against the dollar - taking it to around $1.20.

If you think the country is likely to vote to leave Europe, therefore, the sensible strategy would be to buy your holiday money well in advance of the vote, before the pound has time to fall any further.

The difficulty is, that a vote to remain in Europe could have the opposite effect, boosting the pound, so that you get more euros and dollars for your money. If you think the country is going to stick with the status quo, therefore, you should wait until after the vote.

What can you do?

If you have no idea what to expect - which is where most people stand at the moment - it's worth considering getting your cash in advance, but from a company that offers a guaranteed buyback deal. Moneycorp, American Express and Travelex will all buy the cash back for a set price if you make a mistake with the timing. It means that you can buy in May, and if the country votes to remain and the pound booms, you can sell the currency back to the company and buy it again at a better price.

It's worth noting that you will need to pay for this protection - and it will set you back up to £3.99 per transaction. The buyback also usually lasts between 30 days and 45 days, so you still need to get your timing right. However, if you are exchanging reasonably large sums, it can be a sensible precaution.

Ian Hughes, Chief Executive of Consumer Intelligence said: "No matter your view on what is right for the UK it can make sense to buy holiday cash now and avoid losing up to 20% on your Euros if you wait until June 24th and the UK votes to Leave."