Pound crashes against euro and dollar

Money exchange service The value of the pound has slumped against both the euro and the US dollar, meaning that Britons heading abroad will get a lot less bang for their buck.

Sterling fell to a 16-month low against the euro and a nine-month low against the US dollar yesterday.

And that makes everything from a meal in a New York diner to a ski lesson in the French Alps more expensive for Brits abroad.

According to currency website XE, £1 is currently worth €1.155 and $1.522 (correct at time of writing).

Against the euro particularly, this is a huge drop from earlier this year, when £1 bought you €1.23.

It also means that the value of the pound has fallen a by more than 10% since July last year, when £1 bought you €1.29.

Holiday spending money of £500 is now worth just €577 euros, down from €645 euros last summer, when the pound was at a four-year high.

Chris Saint at financial adviser Hargreaves Lansdown said: "The pound has now dropped a startling 7% versus the euro and 5% against the US dollar since the start of the year alone."

David Swann at foreign exchange specialist Travelex told the Daily Mail that the latest slump "comes as yet another blow to British holidaymakers".

"For those heading to the eurozone, this means they are getting the worst rate since October 2011," he said.

Those going overseas later in the year could have it even worse, though, as the slump is expected to continue in the coming months.

According to Money Observer, fears about further quantitive easing and a potential triple-dip recession are to blame.

Saint agrees. "Against an uncertain economic growth backdrop, more policymakers could be willing to overlook stubbornly high UK inflation in the coming months, putting further downward pressure on the pound as more quantitive easing becomes a realistic prospect," he said.

Anyone needing euros or dollars later in the year may well be better off ordering them now as a result.

To maximise the foreign currency you get for your sterling, it is also sensible to shop around online for the best interest rates and to check that you are not paying over the odds in commission or fees.

For larger amounts, international transfer specialists such as Global Reach Partners often offer the best value for money.

For smaller amounts, online operators such as Travelex generally offer better deals than high street banks, for example.

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