London Daily

Focus on the big picture.
Saturday, May 31, 2025

Weak pound puts the squeeze on holiday spending

Weak pound puts the squeeze on holiday spending

The pound's weakness against the dollar and the euro spells bad news for British holidaymakers this summer.

Fears over the UK economy are weighing on markets, causing sterling to sink below $1.20 on Tuesday, its lowest level since the start of the pandemic, before partly recovering on Wednesday.

Versus the euro, the pound is hovering near thirteen-month lows.

As a result many Brits traveling abroad in the next few weeks will find their spending money won't stretch as far.

"The pound remains a very vulnerable currency," said Jane Foley, head of foreign exchange strategy at the Dutch bank Rabobank.

"A lot of this is related to fears about growth," she continued, noting that political uncertainty and a potential trade conflict with the European Union were likely to add to investors' concerns about the UK's economic outlook.

The weakness of the pound will "add to the gloom" for British holidaymakers, who are already facing the prospect of travel disruption, said Ms Foley.

After more than two years of Covid restrictions, many people are planning their first trips overseas, with the peak summer holiday season and the long school break hovering on the horizon.

But when they get there, they could find the pound in their pocket doesn't go as far, Ms Foley warned.

"If you're going to the Eurozone or the United States, you're going to be able to purchase less," she said.

"When we look at the dollar, it's very strong, so holidaymakers going to the US are really going to see the weakness."

Some holidaymakers will already have adjusted for this, however.

"Sterling's been on the backfoot for several years, so to some extent this weakness is already expected," Ms Foley said.

Fears have grown over the prospects for the UK economy after figures showed it shrank again in April for the second month in a row, with businesses feeling the impact of rising prices.

There is uncertainty over how fast the Bank of England - which is expected to raise interest rates again on Thursday - can tighten policy this year to tame inflation without further hurting the economy further.

However the pound's weakness is also a result of a strong dollar, Ms Foley said, with rising interest rates there making the US currency more attractive.

"A more aggressive pace of US interest rate hikes is certainly propping up the dollar," she said. The US central bank, the Federal Reserve, is expected to raise rates substantially after its policy meeting on Wednesday, to try to curb rising inflation there.

"Also, the dollar does have this safe haven appeal, so when we're looking at concerns perhaps about China, perhaps about the gas crisis in Europe, a large part of this does create an environment where people want to hold dollars."

Newsletter

Related Articles

0:00
0:00
Close
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
White House Press Secretary Criticizes Harvard Funding, Advocates for Vocational Training
France to Implement Nationwide Smoking Ban in Outdoor Spaces Frequented by Children
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
U.S. Justice Department Reduces American Bar Association's Role in Judicial Nominations
U.S. Department of Energy Unveils 'Doudna' Supercomputer to Advance AI Research
U.S. SEC Dismisses Lawsuit Against Binance Amid Regulatory Shift
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
Italy Faces Population Decline Amid Youth Emigration
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Trump Accuses China of Violating Trade Agreement
Gerry Adams Wins Libel Case Against BBC
Russia Accuses Serbia of Supplying Arms to Ukraine
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
Chinese Woman Dies After Being Forced to Visit Bank Despite Critical Illness
President Trump Grants Full Pardons to Reality TV Stars Todd and Julie Chrisley
Texas Enacts App Store Accountability Act Mandating Age Verification
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Vatican Calls for Sustainable Tourism in 2025 Message
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
Trump Threatens 25% Tariff on iPhones Amid Dispute with Apple CEO
Putin's Helicopter Reportedly Targeted by Ukrainian Drones
Liverpool Car Ramming Incident Leaves Multiple Injured
Australia Faces Immigration Debate Following Labor Party Victory
Iranian Revolutionary Guard Founder Warns Against Trusting Regime in Nuclear Talks
Macron Dismisses Viral Video of Wife's Gesture as Playful Banter
Cleveland Clinic Study Questions Effectiveness of Recent Flu Vaccine
Netanyahu Accuses Starmer of Siding with Hamas
Junior Doctors Threaten Strike Over 4% Pay Offer
Labour MPs Urge Chancellor to Tax Wealthy Over Cutting Welfare
Publication of UK Child Poverty Strategy Delayed Until Autumn
France Detains UK Fishing Vessel Amid Post-Brexit Tensions
Calls Grow to Resume Syrian Asylum Claims in UK
Nigel Farage Pledges to Reinstate Winter Fuel Payments
Boris and Carrie Johnson Welcome Daughter Poppy
×