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Pound plunges in Europe but canny holidaymakers can still make their cash stretch further

Press Release   •   Feb 20, 2016 00:01 GMT

  • Pound plunges to a 13-month low against the euro but lower resort prices cushion the blow
  • Sterling is stronger than a year ago in top long haul holiday destinations
  • UK tourists will have 18 per cent more pesos to spend in family favourite Mexico
  • But Japanese yen has surged in value for the first time in over two years – UK visitors will get 11.6 per cent fewer yen for their pounds

The pound may have plunged to a 13-month low against the euro¹ and other European currencies but there is plenty of good news for people planning trips abroad in one of the busiest holiday booking months². Research by Post Office Travel Money for its Holiday Money Report reveals that lower prices in most European resorts will cancel out the impact of the sterling slide. At the same time currencies for many popular long haul destinations including Mexico, Malaysia and Thailand have weakened against the pound³.

The biggest gain for sterling has been against the South African rand so UK tourists on safaris, fly-drive trips along the Garden Route or exploring Cape Town will see travel cash stretch 26 per cent further than last year. In just five years sterling has doubled in value against the rand.

Sterling is also surging against the Mexico peso, which means that Cancun will be a bargain bet in 2016. Sterling has risen in value by six per cent since the start of the year and in a year has gained 18 per cent against the peso. This means UK visitors changing £500 will get £76 more in peso than a year ago. Mexico may therefore be a better bet for a budget break than the Caribbean, where the pound buys seven per cent less currency than a year ago.

Holidaymakers heading east will be better off in Asia and the Indian Ocean as well. A sterling surge of over nine per cent against the Malaysian ringgit compared with a year ago has compounded the impact of falling prices in Penang to make tourist staples 27 per cent cheaper in Malaysia’s most popular destination4. Sterling has also strengthened by 1.5 per cent against the Thai baht year-on-year.

While the US dollar is at a five-year high against the pound, making top UK choices Orlando and New York around 10 per cent more expensive, three other dollars are significantly weaker. The Australian, New Zealand and Canadian dollars have each fallen in value since last February and are now over 10 per cent weaker than two years ago.

One of the few European currencies to have lost ground against sterling is the Norwegian krone. A six per cent year-on-year drop, rising to 22 per cent over two years, makes a Northern Lights trip to Norway a better prospect than visiting Iceland for the Aurora Borealis. Sterling has fallen 10.5 per cent in value since last February against the Icelandic krona.

Andrew Brown of Post Office Travel Money said: “This is definitely a year when it will pay people to do their homework before booking a destination. With sterling’s recent fall in value against more than half of our bestselling currencies, you can’t blame them for thinking twice about where to go on holiday. However, canny travellers will be ‘quids in’ if they opt for destinations with weak currencies or those where local prices are low. Better still, if they combine both elements their holiday money will stretch further.”

Most notably, despite a fall of over 10 per cent since last summer when sterling hit €1.41 to £1, the picture is far from gloomy for people planning visits to the eurozone. Post Office Travel Money research shows that fierce competition to attract tourists has led to hefty price-cutting in many popular holiday destinations – resulting in lower rather than higher prices this year5.

In Portugal’s Algarve and on the Greek island of Corfu, meals and drinks will cost UK visitors 13 per cent less than a year ago because local price falls far outweigh sterling’s slide. Prices are also cheaper in Sorrento, Italy (down five per cent) and on par with 2015 on Spain’s Costa del Sol.

Outside the eurozone, while the Croatian kuna (sterling -6.9 per cent) and Bulgarian lev (-5.7 per cent) are among the 10 currencies against which sterling has fallen most, local price falls mean the Post Office barometer of tourist staples is down 11 per cent in Sunny Beach, Bulgaria, one of Europe’s biggest bargain resorts, and four per cent cheaper in Zadar, Croatia.

However, city break holidaymakers visiting Prague will have to dig deeper in their pockets. Not only has the Czech koruna risen in value 7.8 per cent since last February but higher meal prices mean that Prague is likely to be around 20 per cent more expensive than last spring6.

Sterling’s biggest fall of 11.6 per cent has also been the most surprising. After two years when holidaymakers could look forward to seeing their pounds stretch much further in Japan, a surge in its value means they will get around £66 less Japanese yen on a £500 transaction.

The Post Office is the UK’s leading provider of foreign currency, offering euro on demand at over 10,000 branches and US dollars at 4,000 branches. 1,600 larger Post Office Branches stock 30 leading currencies while up to 70 currencies can be pre-ordered at over 11,500 branches or online at postoffice.co.uk/travel for next day branch or home delivery.

ENDS

For more information, please contact:

Gabrielle O’Gara Post Office Press Office 0207 250 2534 / 07718 977702

Gabrielle.ogara@postoffice.co.uk

Notes to Editors:

¹ Post Office euro exchange rate on 17 February 2016 is €1.241 compared with €1.248 on 14 January 2015, a 13 month low for the pound. Compared with two years ago, sterling is worth 6.6 per cent more currently compared with the rate of €1.176 in February 2014.

² Source: Association of British Travel Agents says a third of those planning holidays abroad will have booked by the end of February.

³ Post Office Travel Money comparison of exchange rates in February 2016 compared with February 2015:

Currency % +/- 2016 vs. 2015 February 2016 February 2015 £500 buys +/- 2016 vs. 2015
Currencies whose exchange rates have weakened against sterling
South African rand +26.0% 21.5659 17.1169 +£103.15
Mexican peso +18.0% 25.4102 21.5322 +£76.31
Malaysian ringgit +9.1% 5.6336 5.1654 +£41.55
Norwegian krone +6.0% 11.768 11.108 +£28.40
New Zealand dollar +6.0% 2.0857 1.9674 +£28.36
Canadian dollar +3.6% 1.8996 1.8340 +£17.27
Peru Nuevo sol +5.3% 4.5502 4.3231 +£24.95
Kenyan shilling +3.3% 134.1192 129.8358 +£15.97
Australian dollar +2.1% 1.9495 1.9100 +£10.13
Thai baht +1.5% 47.7096 47.0023 +£7.41
Currencies whose exchange rates have strengthened against sterling
Japanese yen -11.6% 153.699 173.9501 -£65.88
Icelandic krona -10.5% 163.8083 182.9435 -£58.41
Czech koruna -7.8% 32.0945 34.8153 -£42.39
UAE dirham -7.3% 4.9908 5.3857 -£39.56
East Caribbean dollar -7.2% 3.5339 3.8082 -£38.81
Barbados dollar -7.2% 2.6242 2.8278 -£38.81
Croatian kuna -6.9% 9.1318 9.8110 -£37.19
Swedish kronor -6.4% 11.514 12.3049 -£34.35
US dollar -6.3% 1.391 1.4840 -£33.43
Bulgarian lev -5.7% 2.3481 2.4902 -£30.26
4 Source: Post Office Worldwide Holiday Costs Barometer

5 Source: Post Office Worldwide Holiday Costs Barometer basket comprises a three-course meal for two with a bottle of wine, cup of coffee, bottle of beer, glass of wine, Coca-Cola, 1.5 litre bottle of supermarket still water and suncream

Destination Post Office Holiday Costs % +/- 2016 vs. 2015
Portugal: The Algarve £27.56 -13%
Bulgaria: Sunny Beach £29.12 -11%
Spain: Costa del Sol £34.44 =
Greece: Corfu £42.66 -13%
Croatia: Zadar £48.84 -4%
Italy: Sorrento £70.11 -5%

6Source: Post Office Worldwide Holiday Costs Barometer

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