As the pound hits a high against the euro and currencies such as the florint and Turkish lira, is it time to buy your holiday money?
Good news if you are going on a eurozone holiday: the pound is the strongest it has been against the euro since August 2010, which means you should get more spending money for your sterling.
Each £1 is worth around 1.22 euros on the interbank rate, the rate at which banks sell currency to each other, used generally as an exchange benchmark. Rates for consumers are always a bit lower: on 23 April, for example, £1 would have typically bought you between 1.15 and 1.20 euros depending on which online supplier you chose, according to comparison website Compareholidaymoney.com.
So, if you can afford to, should you be stocking up on your holiday euros now for summer?
Some foreign exchange specialists are saying that the strong pound makes it a good time to buy euros, but others forecast that the pound will rise even more.
Alex Lawson, senior broker at foreign exchange company Moneycorp.com says: “There’s a good chance that the pound could rise further against the euro over the next month or two … but this is less down to any inherent strength in sterling, and more due to the continued weakness of the euro. A smart strategy would be to buy some of your holiday euros now, and the rest closer to your departure. That way you’ll get some at a good rate – and may get the rest at a brilliant rate.”
Richard Driver, currency analyst at foreign exchange company Caxtonfx.com, says: “We are expecting further gains in the direction of €1.30 this year.” But he warns: “As ever, consumers should avoid buying their euros at the airport or abroad. Planning ahead can really save you money.”
It is not just against the euro that the pound has risen. Both Hungary and Turkey should be cheaper this year. Paul Crombie, of foreign exchange company Changegroup.co.uk, says sterling is 18% stronger than last year against the Hungarian florint and 14% stronger against the Turkish lira.
The annual Post Office Holiday Costs Barometer of 15 destinations, also suggests good value in Bulgaria and Croatia. Its survey, which compares prices for a shopping basket of 10 items in a resort – including a three-course evening meal with a bottle of house wine for two – found that it has changed markedly over the past year. This, combined with the currency exchange movements, mean that the cheapest resort is not necessarily the one with the weakest currency against the pound.
Rising prices in Spain, for example, where the barometer shopping basket now costs £56.84, means it has lost its best value spot to Bulgaria, where the same goods cost just £42.79.
“Bulgaria is well ahead of its rivals when it comes to value and 4% cheaper than a year ago,” the survey says.
Spain, where escalating meal costs in the Costa del Sol have led to a 35% rise in its barometer total since 2011, has dropped to fourth place. It has been overtaken by the survey runner up, Turkey (£54.22), where resort charges in Marmaris have dropped 22% over the past year and are down by over a third compared with 2010.
The report says: “Prices are now on par with 2008 when Turkey was a magnet for UK tourists in search of a bargain deal – but 28.5% lower than in 2009 when costs first began to soar. The 2012 turnaround comes as restaurants and bars appear to have cut prices to bring back business, resulting in a drop of 12% in local costs.” The 14% rise in the pound against the Turkish lira also means that someone exchanging £500 for lira will have £60 more to spend than last year.
In third place, the Algarve (£54.46) is also ahead of the Costa del Sol for the first time in two years, making Portugal the cheapest eurozone destination surveyed.
Greece and its islands are more costly, despite the financial crisis that has enveloped the country. Prices are up 11% in Corfu and are 21% pricier than neighbour Turkey. But costs have dropped 19% in Cyprus (£57.57), 11% in France’s Vendée region (£66.43) and 6% in Malta (£64.81).
Outside the eurozone, Croatia’s prices are on par with 2011 (£73.65); prices in Dubai (£59.75) are 15% per cent cheaper than its mid-haul rival, Egypt (£70.29). However, the pound has weakened against the US dollar, so that sterling will buy 2.7% fewer US dollars than last April.
And where is the highest priced destination in the Post Office survey? It’s Brighton, UK, where the shopping basket of goods costs £79.25 – 3% more than a year ago.