Pound is savaged but FTSE stays strong
11 July, 2017
The poor old pound got mauled by bears this week, as politicians negotiating Brexit demonstrate levels of decisiveness usually associated with toddlers allowed just one sweet from a variety pack of Haribo.
As the pound gets beaten up, this of course translates into Consumerville via appalling exchange rates. At Heathrow on Wednesday, travellers were offered just €0.93 for their pound. Ouch. Check out 4 ideas below for how to avoid being drained by currency leeches.
But the FTSE saunters upwards…
Of course, one consequence of a weak pound is typically a higher FTSE 100. This main index has risen by 5% over the last 12 months, and by over 10% since April. And currency is one contributing factor.
Why? Well the FTSE100 brigade are global firms who rely on Shanghai more than Sheffield for revenues. So when they translate money made in other markets back into shabby pounds to report their results, the bottom line gets bigger.
Let’s take that most British of brands, Burberry, as an example. They may supply the Queen and make posh macs modelled by the leggy upper class, but in fact 41% of their revenues come from Asia, 23% from America and 36% from Europe, the Middle East and Africa. A weaker pound is not bad news for them.
Brexit-induced uncertainty shows no signs of ending. Sorting out a card or a mechanism for managing foreign currency is one thing we can do – we can’t control global currency markets, but we can control the fees we pay and the rates we are offered.
My 4 currency tips
Look at an account with a challenger bank. Starling and Monzo are both interesting options. I love my Monzo app and use this when abroad. Starling doesn’t charge for non-sterling transactions or cash withdrawals when you use their debit card abroad.
Revolut is a pre-paid card with awesome exchange rates, no spending fees but free ATM withdrawals are limited to £200 per calendar month. I hear lots of great feedback from users.
The Halifax Clarity credit card - offers no fees on overseas spending, though ATM withdrawals will incur interest even if you pay off the card in full. But this option only makes sense if you repay in full every month, or there are high interest rates to pay. I haven’t used this personally.
Finally cash is still an OK choice! The Post Office online bureau is reliable, delivers to your home and as at yesterday was offering €550 for £505. I’ve used the service before and it was really smooth.
That’s it for this week. Have a lovely weekend. I’m not sure if I’m allowed to complain about it being cold yet!? I vaguely remember saying I would never complain about rain again a few weeks ago… but come on! It’s August!!