23 May 2025, 14:18
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On Friday, the pound traded at its highest value in three years against the US dollar, giving Brits travelling to the US better purchasing power.
On Friday, the pound traded at £1.3468 against the dollar – its highest value since February 2022.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “If you are travelling to the US this summer, it might persuade you to exchange at least some of your cash while the pound is riding high.”
A stronger pound is good news for holidaymakers, who will receive more cash when exchanging pounds for dollars.
With the pound-to-dollar rate at its current value, exchanging £100 would give travellers $134 dollars. When the pound hit a record low against the dollar in September 2022, exchanging £100 would have returned just $103.
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The pound’s boost is in part due to UK retail sales rising and continuing unease from investors concerning US assets.
The pound’s strength has risen after experts predicted that the Bank of England will reduce interest rates just one more time this year, instead of the three cuts to interest rates previously predicted.
This is due to rising costs for gas, electricity, water, and travel, which pushed UK inflation to its highest level in 15 months in April.
With inflation higher than predicted, the Bank of England may be cautious about further cuts to interest rates.
Earlier this month it reduced interest rates from 4.5% to 4.25%.
Experts in the US believe the Federal Reserve will cut interest rates twice more this year, making the UK more appealing to investors and pushing up the value of the pound.
