The best rates for holiday money are available in recent years
The pound reached a new daily high of 1.3382 versus the dollar on Monday, as it aims to achieve a fifth straight day of gains. It reached 1.20 against the euro for the first since April 2022. You should be aware that there is a sliding rate, which reduces the exchange rate to 1,1933. TravelFX offers a rate of 1.1813.
For dollars buyers, the Wise Currency Card will deliver an effective exchange rate (1.3258 after subtracting their fee). TravelFX can deliver your money at a rate 1.3195.
Will pound rates continue to increase? The pound is affected by interest rates. This creates capital inflows that support the pound. This creates inflows of capital that support the pound.GBP/USD received a bump last week when the Federal Reserve finally took the plunge and lowered interest rates, thinking that the U.S. economy is starting to slow and that inflation has been tamed.
This means the UK’s central bank interest rate is now above that of the U.S., which has bolstered the pound relative to the dollar.
The eurozone’s economic challenges and their effect on exchange rates
Turning to the euro, news this week has not been good supportive as it is clear the Euro Area’s economy is potentially in a recession.
The PMI survey released on Monday showed a rapid slowdown of activity in September and will raise the alarm in Frankfurt, where the European Central Bank will have to consider cutting interest rates again in October.
This would be the third cut from the ECB and puts it well ahead of the Bank of England.
By contrast, the UK’s PMIs showed Britain’s economy remained in expansion mode in September with ongoing signs of inflationary pressures. The ECB will be on hold until the end of November, and this will support UK bond yields. Experts’ opinions
While the backdrop supports further pound gains it is important to remember that currencies do not move in a straight line. The chance of a retreat grows by the day with some analysts warning the rally means the pound is overbought.
However, weakness should be shallow, for the time being at least.
Ricky Willis is the original Skint Dad. Money-making enthusiast and father to Naomi. He’s always on the lookout for new ways to make a little more money.
