Sterling recovers from 2016 low, says Post Office

Sterling is 9.4% stronger YoY against the NZ dollar

Post Office Travel Money’s latest Holiday Money Index covering January to September 2017 marks a change in sterling’s fortunes and confirmation of a strong appetite for overseas travel. 

The report shows year-on-year growth in sales for 60% of its bestselling currencies, while sterling is now stronger than a year ago against three-quarters of the top 40 Post Office holiday currencies.

Compared with October 2016 when sterling sank to a year low, only 10 currencies are currently stronger against the UK currency. The pound is weakest against the Czech koruna and Polish zloty and will buy 5.9% fewer koruna and 3.2% less zloty.  By contrast, sterling has made its biggest gains of 28% against the Turkish lira and 17.1% against the Japanese yen.  This means holidaymakers changing £500 will get around £110 more lira and over £73 extra yen than a year ago.

The 10 currencies against which sterling has made its biggest gains of over 9% since last October have also fallen in value since April this year.  This includes the US dollar – 9% weaker year-on-year against sterling and 4.8% down on April – and currencies for the Caribbean and Middle East that float alongside the dollar.

The biggest fall since April (8.3%) has been for the Japanese yen, which is one of nine long haul currencies to rate among the 10 which are currently weakest against sterling.  This contrasts with the 10 currencies that are strongest against sterling where all are European.  Sterling is roughly on par with a year ago (-0.2%) against the euro.

Meanwhile, sterling’s volatility has not impacted on currency sales in the way that might be expected, indicating an underlying resilience in the overseas holiday market.   Post Office Travel Money found year-on-year growth for three in five of its 20 bestsellers, including the euro and US dollar.

The most notable strides have been made by the New Zealand dollar, where sales have risen 43% compared with the same period last year, not only making it sixth in the Post Office top 20 but leader in the Fastest Growing Currencies chart as well.  While that growth level was boosted by the Lions summer tour, a 29% rise year-on-year in September suggests continuing strong demand.  At the same time sterling is 9.4% stronger year-on-year against the NZ dollar, putting more cash in tourists’ pockets.

Andrew Brown of Post Office Travel Money said: “The fact that almost half our 20 bestselling currencies feature among the fastest growing ones is important because the high volumes we already sell make these sales increases very sizeable.  Big increases in Post Office currency sales are an indication of the confidence felt by consumers that they can still afford to holiday abroad.

“Affordability remains the key issue for people planning trips abroad and this does not only relate to package costs.  Holidaymakers are increasingly aware how much extra they will spend once they reach their destination so the fact that sterling has climbed back from its lowest level 12 months ago will provide a welcome confidence boost for the market.”

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