How to get the best holiday exchange rates

holiday money A woman and a child are sitting on a wall near the ocean, eating ice cream. The woman is wearing a yellow shirt and a straw hat. Scene is lighthearted and fun, as the two enjoy their time together

This week the value of the pound hit 1.18 euros (GBPEUR=X) — its highest point since August 2022. For anyone planning a holiday to the Eurozone, it has raised the question of whether now is a good time to get your holiday money.

The pound’s gains against the euro came as the European Central Bank cut interest rates. Lower rates in the eurozone make rates in the UK look comparatively attractive to investors, so money has flowed from the eurozone to the UK, pushing the pound up against the euro.

With the ECB cut largely already reflected in the current exchange rate, if you’re travelling to the eurozone this summer, it might persuade you to exchange at least some of your cash while the pound is riding high.

Of course, there are no guarantees it won’t rise even higher by the time you travel. Forecasting exchange rate movements is notoriously difficult, and they’re affected by all sorts of unpredictable factors, so the pound could rise again. It means you might not want to take a punt on this being the peak, and exchanging all the cash you need on your break.

One possible option is to exchange some of it now, and the rest of it closer to the day you travel, to hedge your bets against a fall in the pound between now and then.

However, it’s important to bear in mind that the best exchange rates for holiday money are available for those who spend on debit and credit cards while they’re away (as long as they’re the ones without additional charges for overseas use).

Read more: Is now the best time to buy travel money for summer holidays?

If you’re going to take advantage of one of these cards, you can’t try to time your exchange — it will happen whenever you spend money on holiday. If you forgo the best possible rate, in order to try to beat the currency markets, you could find you lose more on the exchange than you gain by the timing.

Given that the difference between the best and worst rates can be as much as 10%, and the difference between the highs and lows of the exchange rate over the past 12 months was less than 5%, you could end up being better off just spending on your usual travel card.

Some people will choose to get half their money now while the rates are attractive, and then use a debit or credit card for the rest of their spending. It should mean you get a decent rate on both, and you have an extra option if you can’t use your card for specific purchases while you’re away and are out of reach of an ATM.

However, no solution can be guaranteed to be the best at this stage. If you have a limited amount of time to deal with your travel money, it’s probably better spent getting hold of a credit card or debit card with no fees for overseas spending rather than worrying about trying to perfectly time the global currency markets.

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