The pound has risen to its highest value against the dollar since February 2022, with experts warning travellers to the country to take advantage. A strong pound is good news for holidaymakers who in turn will see their money go further while in the US.
The boost in the pound has come in part as a result of rising UK retail sales combined with continuing unease amongst US investors. One expert has warned those heading across the Atlantic to consider doing one thing to ensure they maximise the current strength of the UK currency. Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “If you are travelling to the US this summer, it might persuade you to exchange at least some of your cash while the pound is riding high.”
The current rate means that at its current value, exchanging £100 would give travellers $134 dollars.
In September 2022, when the pound hit a record low following Liz Truss’s “mini-budget”, £100 would have equated to just $103.
The pound’s value has risen amid predictions by experts that the Bank of England will reduce interest rates once this year, instead of three times has had been originally predicted.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Sterling has risen amid expectations that the hotter inflation number will make policymakers more inclined to keep interest rates higher for longer.”
The rise in the pounds value signals a belief amongst investors that rates will not fall as far or as fast as previously thought.
Monica George Michail, economist at the National Institute of Economic and Social Research, said: “We anticipate just one further interest rate cut this year.”
Chancellor Rachel Reeves is currently facing pressure after UK borrowing rose to £20.2 billion in April, far exceeding forecasts and calling into question her ability to meet her fiscal targets.
The Chancellor has said that she hopes to balance day to day government spending by the end of the parliament, despite government pledges to increase defence spending and fund public service improvements.
Deputy director for public sector finances at the ONS Rob Doody said: “At £1 billion higher than the same time last year, this April’s borrowing was the fourth highest for the start of the financial year since monthly records began more than 30 years ago.
“Receipts were up on last April, thanks partly to the higher rate of national insurance contributions.
“However, this was outweighed by greater spending, due to rising public services’ running costs and increases in many benefits and state pensions.”
