How The Brexit is Hurting the Pound
The summer is here and holiday times are upon us, so off we go packing the sunscreen, drinking too much, and exchanging money for our well earned holidays.
But wait, have you looked at what the exchange rates are lately???
They are how should we put it, not so good.
The Pound has been fluctuating in value for a couple of years now, hitting some all time lows, and most of this is due to the Brexit.
Like it, hate it, voted to leave, voted to remain, it doesn’t matter now, the Brexit is soon to be here; deal or no deal!
And when you toss in the fact we will have a new Prime Minister in a couple of weeks, and the uncertainty of this, it all makes for a mix that affects the value of our beloved Pound against other currencies.
Especially the Euro and the USD/Dollar.
These seem to be the two big currencies we deal with as Brits, especially on holidays.
And what better time to have a have a new Prime Minister and have to deal with a “deal or no-deal” Brexit than around the summer months and peak holiday season.
The Pound drops, and our holidays cost us more.
Instead of a Pound getting us 1.10 or more in Euros, it has become less. And why you may ask, confidence, confidence in the currency and our politics, all affect the Pound’s value.
In fact Sir Richard Branson has said that the UK leaving the EU without a deal “would cause the pound to slump”.
He has stated, “The pound was at $1.53 when the referendum took place. The pound today it is at $1.22, $1.23, and the pound will collapse to parity [one for one] with the dollar if there is a hard Brexit.”
Regarding his Virgin conglomerate, he stated no-deal would be “devastating for many Virgin companies.”
He adds, “It obviously is going to result in us spending a lot less money in Britain, and just putting all our energies into other countries.”
I am sure he is not alone in his thinking…well all except Tim Martin, the Chairman of JD Wetherspoon.
However, the Pound slumping doesn’t just hit us in our holiday pocketbooks, it may else where as well. In the cost of goods and some services.
Anything we buy from the EU or the states, will cost more in the end as the Pound will not go as far.
Paying Debts Abroad and Exchange Rates
As the world has gotten smaller and we travel more, we may take up residence in another country, and that country may be in the EU.
We live and work there for a period of time, and then may move back to the UK, and while we were living and working abroad, we ma have taken out credit cards, loans, or in some way accrued some debts.
Debts which we are now still paying while we are back here at home in the UK.
Debts which we may have initiated with Euros, we may have borrowed 1,000 Euros, or had a credit card with a credit limit of 2,000 Euros.
Paying these using our English accounts here and transferring money, we always were on the better end of the exchange rate.
If a monthly payment on a loan was 100 Euros, it might cost us £80 if the exchange rate was 1.25 Euros to the Pound.
If the Pound drops, and the Euro gets stronger, then we pay more each month; and if the Pound and Euro go on par, a 100 Euro payment will cost you £100.
This can occur with any currency in the world, if the Pound is weak, it can cost us more.