THE pound has hit its highest level against the dollar since the Brexit vote after pushing past 1.35 versus the US dollar.
It comes after a senior Bank of England official fuelled speculation that it may raise interest rates in the next view months to clamp down on spiralling costs that are blighting households and firms.
What has happened to the dollar conversion rate in the past year
Sterling began weakening against the dollar on June 23 2016 when the Brexit referendum took place.
It then dropped even further in early October 2016 when Prime Minister Theresa May announced she intended to begin the formal process of leaving the EU by the following March.
Brexit uncertainty has meant that the pair have continued to move against each other, according to foreign currency exchange experts Travelex.
A spokesman told Sun Online: “The US dollar has since weakened throughout 2017 in the midst of political turmoil.
“Sterling has continued to rise against the dollar and has rebounded to a yearly high.
“This has been driven by higher than expected inflation figures.
“Travelex Online Happy Hour rate 1.2969 on August 1 was at the time the highest in 300 days.
“Today’s regular online rate is even higher that’s not on happy hour.”
How do interest rates affect the pound to dollar exchange rate?
Higher interest rates in general increase the value of a currency.
Bank of England interest rate is currently set at 0.25 per cent while the US Federal Reserve has set it at 1.25 per cent (having increased from 1.00 per cent in June).
Current political situation appears to be overshadowing difference in interest rates.
What other things affect the pound to dollar exchange?
Any economic or political data and market uncertainty.
The dollar’s performance is usually linked to events solely affecting the USA.
For example if Donald Trump strikes a trade deal or pulls out of an existing one.
The exchange rate could also be influenced by international events such as war with North Korea breaking out.
Where is the best place to get dollars?
Dollars can be bought at supermarkets, the Post Office and currency specialists – but rates vary massively.
The best rates can often be found at specialist online outlets, such as Travelex, which will deliver your cash directly to your home.
Alternatively, FairFX offers currency cards which you can load up with sterling and then spend abroad like a debit card.
Travellers can use comparison sites, such as MoneySavingExpert’s TravelMoneyMax, to find the best rate.
If you order in advance and pick up the cash then you’ll most likely get a better rate than if you walk in.
You can also buy last-minute currency at the airport, but expect to be hit with poor rates.
It’s almost always much cheaper to buy your currency before you get to the airport.
The rates you’ll see above are the “spot” currency rate that is traded on the market.
These are different to the rates offered by currency exchange businesses, but changes in the spot rate do have an effect on how much cash you get.
How to get the best holiday money rate
WE spoke with Hannah Maundrell, editor-in-chief at money.co.uk to find out how you can guarantee the best rate when you go on holiday
- Don’t buy cash at the airport– you’ll always be able to beat the rate with a bit of forward planning
- Compare travel money companies online – Factor in delivery costs and choose the option that gives you the most cash to spend on holiday. If you’ve left it until the last minute order online for airport collection so you get the best of both worlds.
- Use comparison tools– MoneySavingExpert’s TravelMoneyMax enables you to compare pick-up and pre-order rates.
- Don’t pay for travel money with a credit card– it’s likely you’ll be charged a cash withdrawal fee which adds to the cost.
- Top up a prepaid card to lock in your rate now – Choose your card and read the T&Cs carefully as some apply hefty fees. WeSwap, FairFX and Caxton FX are all worth checking out.
- Always choose to pay in the local currency rather than sterling– This will help you avoid sneaky exchange fees