How Brexit and Article 50 Will Affect Your Travel Money Exchange Rates
Although a sizeable portion of the news in relation to Article 50 has concerned political implications, there are many other viable issues that have some Britons worried. One aspect that is particularly challenging is the impact that this move will have upon current and future exchange rates. With so many Britons planning a holiday in the European Union sometime this year, such a question is indeed relevant. Let us take a look at what some of the experts believe will happen as well as a broader overview of how the pound should fare in the coming months.
A Perceived Strength
It is first important to note that many residents of the United Kingdom believe that the pound is much stronger than it actually is in relation to the euro and the dollar. Whether this is due to memories from the past or simply from not following the news is no longer relevant. The fact of the matter is that some analysts feel that the pound could soon experience a close parity with its other major currency counterparts. Of course, this will result in travellers being forced to spend more money while abroad on basic services such as car rentals, accommodations and tourist attractions.
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An Anticipated Outcome
The good news is that it has been known for some time that Theresa May would trigger Article 50. The reason that this is important is that as opposed to sudden and unpredictable geopolitical events, the market makers and the markets themselves have already factored this scenario into the value of the pound. This is the primary reason why we did not witness a massive sell-off once the formal announcement was released. So, we will not likely witness any precipitous declines in the coming months. The only issue that has some experts concerned revolves around the protracted negotiations between the United Kingdom and the European Union. Continued uncertainty could negatively impact the pound from a short-term point of view.
Commissions and Fees
It has been known for some time that exchanging the pound into another currency such as the euro should always be performed at a bank as opposed to within an airport. This is now even more relevant. Assuming that the pound does indeed approach parity with other major currencies, some third-party firms may be looking to increase their commission margins by hiking their standard processing fees. To put this another way, you will be receiving even less for your initial funds. So, it is always prudent to visit your bank before departure. They will be able to provide you with live rates that are free from any types of hidden fees.
All Doom and Gloom?
While we have looked at some potential negative aspects up until this point, it is important to remember that there are millions of Britons who live abroad and who may be planning a visit to the United Kingdom. From their perspective, a weakening pound is actually beneficial.
The main takeaway point here is that it is critical to stay ahead of any of the latest developments as they occur. So, always keep up to date with the CMC Markets coverage of Article 50. Your money will begin to work for you as opposed to the other way around.
Author: Jeremy Biberdorf
