British holidaymakers hold off travel money buys as pound languishes

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British travellers' appetite for dollars and euros has sunk in the three weeks since Britain voted to leave the European Union, as they seemingly wait as long as possible in the hope that the pound's exchange rate will rebound. Both Thomas Cook and Travelex said that travel money business had jumped in the run-up to last month's referendum on EU membership, as those with summer holidays booked in Europe or the United States worried the pound might be worth less afterwards. And since Britain voted to leave, with sterling now down 11 percent against the dollar and 9 percent against the euro, orders have dried up, and are well down on the equivalent period in previous years."After a rush from customers for foreign currency pre-Brexit, we've seen a slowdown," said Fraser Millar, head of financial services at Thomas Cook.

"We think customers are doing their own personal hedging, buying a bit now but holding off to buy the rest until just before they travel, to see whether the rate improves."Some providers said business had not been helped by reports of rates at airports - normally among the most expensive places to buy foreign currency - that put the pound close to parity with the euro, a huge mark-up on the rate of around 83 pence at which travel money firms can buy euros from banks."These sort of reports have probably frightened people off," says Sandy Perera, who runs a network of small foreign exchange booths ranked by comparison sites as among the cheapest places to buy currencies in London.

"This time last year was our peak period and we are down at least 10-12 percent on that. We'll probably get a rush of people next week, which is a big headache for us (because) managing the availability of some currencies is the hard bit."The development of electronic payment infrastructure across Europe has steadily brought down the cost of using major cards abroad to as little as 2-3 percent with major banks and credit card companies.

But when fees for drawing money out of foreign cash machines are added, using a broker to buy cash before travelling can still prove far cheaper. At the start of this year, when many people will have paid for package holidays, the pound was worth around $1.50. On Friday, it was worth just $1.32."The pound's volatility since the Brexit announcement has impacted people's desire to buy the euro and the U.S. dollar," a spokesman for Travelex said."Our rates have had to take the pound's volatility into consideration in order to be able to continue to provide our services to those who needed them."