The effect of Brexit on currency exchange rates

Global markets went into a tailspin today a day after Great Britain voted to exit the European Union.  The transition may take up to 2 years but the effects are already being felt.

The financial markets tumbled.  Other countries are now considering their own referendums.  And the future of the EU is now in flux as more countries may decide to leave.

But not all countries feel the same as England.  Scotland and Northern Ireland were not united in the Brexit, voting instead to remain in the EU.  This could lead to further destabilization with Great Britain and those countries are likely to renew efforts to gain independence from England.

The ripple effects are sure to be widespread and long lasting, but there is a silver lining to all of this…

Uncertainty over the future economic health of Great Britain has caused the value of the British Pound to drop to its lowest value in 30 years.  One Pound is still worth more than 1 US Dollar, but that disparity dropped almost 8% today.  The Yen gained 11% against the Pound and the Swiss Franc is up 6%.

So what does that mean for you?  It means that with the Dollar now stronger relative to the Pound it costs you less money to purchase British goods and services than it had been earlier in the week.  There’s no way to know if the Pound will stay depressed long term but for now it’s worth taking advantage of.  Travelers headed to the British Isles will find that their money goes further as the exchange rate sways in their favor.

If you do plan on travelling abroad, buy your Pounds (or Euros) via your bank.  Local banks traditionally have much better rates than if you were to buy those same notes at the airport or an overseas bank.  Lower fees and better rates equals more bang for your bucks (or should I say ‘more Pounds for your bucks’?) allowing you greater purchasing power for the same amount of money spent.

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