Making Sense of Pounds (£) to Dollars ($)

This is one of the best times to travel to the UK as an American.  The dollar is near historic highs against the British Pound (£), with this morning’s rate being £1 = $1.44.  This first time I traveled to London the £ was at $1.86, meaning that a morning cup of orange juice ran about $8.50!  Still, the UK is one of the most expensive places to travel, particularly given the hidden 20% value added tax (VAT) on every single thing you purchase.  It is basically a sales tax that is already figured into the price of most things you buy.

Having travelled to the UK about 10 times, I can tell you that the worst rate of exchange you will receive while there is at the airport, with our hotel being the second worst place to exchange money.  You are best served by either getting £s at your US bank before we leave or waiting until we find an authorized Money Exchange in Edinburgh.  You can also get the prevailing exchange rate by making an ATM withdrawal at the airport, but in most cases, that means some baking fees with your financial institution.  In the worst case scenario, you can change enough money at the airport to pay for a cab and your first meal in Edinburgh, but please don’t exchange a large amount of money at either a US airport or at the Edinburgh airport.  You will regret it very quickly when you see how much commission they charge and how much lower their exchange rate to buy or sell dollars will be.

At the same time, we will be traveling to Scotland just after the all-important BREXIT vote, in which UK citizens will be voting to either stay in the EU or leave the Union.  Although the UK doesn’t use the Euro, the results of the election will undoubtedly have an impact on the exchange rate between the dollar and the pound.  I can’t predict which way the pendulum will swing, but if things don’t get too volatile, the summer exchange rate should hover between £1 = $1.40 – $1.55.

As you travel it will sometimes seem like something priced in £s is a bargain.  Please do the math before you make any big purchases!  I use a handy app on my iPhone called SmartCoin.  It is free and it will convert using the actual exchange rate at the time of your transaction. You are free to download any of a number of similar apps, but just make sure you get a free version that is capable of updating to the prevailing rate at the time of your purchase.

 

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