Sterling’s strength is good news for Easter holidaymakers says EY ITEM Club
22 April 2014
- Amongst popular tourist destinations, Turkey has seen the biggest improvement in terms of how far UK holidaymakers’ pounds will stretch
- The pound’s purchasing power has also seen a big boost in other tourist hotspots, such as the Australia and South Africa
- But for those holidaying in Europe, the picture isn’t quite as bright
Martin Beck, Senior Economic Adviser for EY ITEM Club, comments: “Sterling’s rise is good news for holidaymakers. But for those wanting their pounds to stretch furthest, far-flung destinations are best.
“Over the past year, sterling has risen in value against all of the 27 currencies on which data is collected by the Bank of England. However, amongst the popular tourist destinations, UK holiday makers will get more for their money in Turkey. The pound has risen a staggering 30% against the Turkish Lira since April 2013.
“Other destinations that have become a lot more cost-effective over the last year include South Africa and Australia, where £1 buys 26% more South African Rand and 23% more Australian dollars, respectively. That said, Australia still remains a relatively high cost destination. The US and Canada have also become relatively less expensive in sterling terms.
“For those planning trips to Europe, the picture isn’t quite so favourable, with sterling up by a relatively modest 2.5% against the euro since last April. But looking ahead, sterling could rise further against the common currency, reflecting the UK economy’s relatively stronger growth prospects.
“However we also expect the pound to decline in value against the US dollar, with monetary policy set to tighten sooner than in the UK. This decline would tend to also push down sterling’s value against currencies linked formally or informally to the dollar - including many emerging economies - or belonging to countries that trade heavily with the US, like Canada.”