With millions of Britons planning a winter holiday in Spain or other European destinations, financial experts are advising people to change their pounds for Euros now before a feared drop in the value of the Pound over the coming months. Travel experts are advising UK holidaymakers to consider acting sooner rather than later when it comes to exchanging currency.
As winter approaches, many will be seeking a sunny escape to warmer climates, but with the value of the British pound continuing to struggle, now is the time to make sure Britons get the most out of the travel funds. The key risk event for the pound this quarter will be the November budget. For now, investors will parse through UK employment data, including wage growth, on Tuesday, as well as economic activity for the three months to August on Thursday, to try to get a sense of where British interest rates may be headed.
“UK data have stabilised anew - we will closely monitor labour market data and August GDP this week, fundamentals are more solid than markets appreciate, and short positions are crowded,” strategists at Barclays said. Six of the nine Bank of England rate-setting committee members will speak this week and, with the central bank’s next meeting not until November 6, investors will be listening carefully for any hint of where monetary policy may go in the coming months.
Money markets show traders expect no change in rates when the BOE meets next and are only pricing in the next cut by March at the earliest. UK inflation is still running above the central bank’s 2% target and a large share of the price pressures are in parts of the economy the BOE cannot easily target, such as wages and the services sector.
The value of the pound has steadily declined over recent months, and at present, £1 is only worth approximately €1.15. This marks a notable drop from earlier this year when it stood at €1.21. Experts are forecasting a further dip, with predictions suggesting that by the end of 2025, the pound could weaken to around €1.11, making it even more important for travelers to secure favorable rates before the pound depreciates further.
In recent times, the UK economy has shown signs of stagnation, with inflation rising and uncertainty surrounding the upcoming Budget. These economic pressures are expected to put additional strain on the pound, which has already fallen by over 4% against the euro in the past year. With fears of a potential recession and budgetary concerns looming, the currency is likely to face even greater challenges heading into 2026.