The timing couldn’t be worse. Just as many of us are preparing to jet off on our much awaited summer holiday break, the pound has taken a further tumble.
Tourist exchange rates are based on how the pound trades on international money markets.
Lately it hasn’t been good. This week, sterling dropped to its lowest level for six months against the euro. Against the US dollar, the pound hit its lowest rate for 27 months.
With uncertainty over Brexit set to continue, many market analysts are predicting further falls.
Despite the gloomy prognosis, it isn’t all bad news. In fact, there are still some destinations where your pound stretches further this summer than it did last year.
Here we take a look at the five cheapest places to go this summer.
However, if you plan to become a so-called “currency tourist”, someone who chooses where to go based on the exchange rate, be warned you may have to travel further afield to do so, and so must factor in the higher flight cost.
The pound is currently returning 50% more Argentine pesos it did a year ago, according to travel money firm FairFX. This means travellers to the South American country receive £322 more of the local currency for every £1,000 exchanged compared with July last year.
Argentina has been plagued by economic problems for years, but last year suffered some of its darkest days after it was forced to turn to the international lender of last resort, the International Monetary Fund, for an emergency $56bn bailout.
The country has been in recession for over a year, its peso currency has plunged and inflation has surged. Whilst this has been devastating for ordinary Argentine citizens, it has been good news for foreign visitors.
For example, an 800g T-bone steak at one of the country’s best steakhouses Don Julio currently costs about £20, whereas a comparable steak would cost more than three times that in the UK.
“Luxury-for-less” is how one guidebook sums up the attraction for many tourists.
The pound is currently 14% higher against the Turkish lira than this time last year. That means if you’re changing £1,000 you’ll get £114 more back, according to travel money firm FairFX.
The country’s popularity was dented by security fears in 2016, but since then its popularity has rebounded. Thomas Cook says that after Spain, Turkey is the most popular destination for its holidaymakers, accounting for a quarter of its flight-only bookings so far this year.
It said the fact the country is not a member of the European Union has made it particularly attractive for tourists amid fears over possible disruption from Brexit on their holidays.
The tour firm says Turkey’s good value for money and its diversity, with beaches, mountains and ancient ruins all available in a relatively small area, also make it attractive.
When Iceland’s three major banks collapsed in 2008 at the height of the financial crisis, there were fears they would take the rest of the economy with them.
Over a decade later, tourism and the economy have both boomed. The Blue Lagoon – a pool of geothermally heated water, rich in minerals and believed to be good for your skin – has become a “must-do”‘ on tourist itineraries.
However, there are now concerns the industry’s growth is beginning to slow.
The total number of foreign overnight visitors to Iceland was around 2.3 million in 2018, a 5.4% increase on 2017. But for the first three months of this year, tourist visitors dropped by 3.7%, according to the World Tourism Organisation, sparking fears the country is losing its allure.
The collapse of Iceland’s major budget airline Wow Air in March, as well as concerns that over-tourism is spoiling the experience, is believed to have contributed to a drop in visitor numbers.
Some hotels have cut rates to try to boost visitors. But the biggest appeal for would-be visitors is likely to be the fall in value of the Icelandic krona. British tourists taking out £1,000 to spend would currently get £113 more, than the same time last year, according to FairFX.
Tourism to Tunisia plummeted after a 2015 terror attack in the resort of Sousse in which 30 British tourists and eight others were killed by a gunman with links to Islamic State.
The Foreign and Commonwealth Office lifted its travel ban against the country last year, prompting British operators to renew flights to Tunisia’s Mediterranean coast.
British tourists heading to the country will currently get 4% more Tunisian dinars for their money than last summer, equating to an extra £42 on a £1,000 spend.
Thomas Cook says the country is now its seventh most popular destination, with package bookings double that of last year.
It’s important to remember that affordability is not all about the exchange rate. To be sure of getting a bargain, you also need to consider the local costs of items.
For example, while the pound is currently hovering at around the same rate against the Bulgarian Lev as it was this time last year, the country still regularly comes top of surveys ranking destinations by price.
A three-course meal at tourist resort Sunny Beach for a family of four, including alcohol, costs £28.51, according to Post Office data. This is substantially cheaper than many other popular destinations.
“Local prices have fallen since last year in eurozone destinations like Portugal, Italy and the Balearic Islands as well as in Bulgaria and Croatia,” says head of Post Office travel money Nick Boden.
“This means that while British visitors will get slightly less holiday cash for their pounds than last year, their currency could well stretch further.”
Travel money tips: Five ways to get the best deal
1. Three months before you depart, set up an alert with a travel money firm to let you know when the pound’s particularly strong. James Hickman, the chief commercial officer of travel money firm FairFX, says this forward planning could save you between £25 and £50 on £500.
2. As exchange rates and fees can vary heavily, buy any foreign currency before travelling, but never at the airport where exchange rates are always poor. MoneySavingExpert’s travel money comparison tool compares rates at about 30 online bureaux and orders them by how much currency you’ll actually get after all fees and charges.
3. Use specialist pre-loaded currency cards. Banks are competing on the rates and deals for overseas use that they offer to current account holders. “Price comparison sites can help you compare deals on foreign currency and prepaid cards,” says Michael Royce, savings expert at the Money and Pensions Service.
4. If you do use a card on your holiday, shops, restaurants and cash machines will usually ask if you want to pay in pounds rather than the local currency. Always choose the latter. Tourists can lose up to 10% by paying in sterling rather than the domestic currency.
5. Lastly, always set a budget for your holiday spending. “Setting a budget will mean that you are able to work out the costs up front and avoid unexpected expenses,” says Mr Royce.