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01 Jul 2016

Understand How Brexit Currency Rates Will Affect Your Finances

Think of Mick Jagger, who studied at the London School of Economics whilst Brexit is rolling ahead, “You can’t always get what you want.” While scaremongering has already exhausted every apocalyptical scenario, several changes are certainly featuring in the near future.

Here are the top five things that Brexit is expected to bring in the coming months, with one caveat: there are those betting that Brexit won’t go through. But even should they be right, and no one chooses to trigger Article 50, we’ll still see the following playing out until September.

Five Things Brexit Brings

1 The pound will be on a rollercoaster ride this summer.  At first it can only go up but no one expects it to recover to the levels seen prior to the referendum. This will have a knock-on effect you may not feel today, but will come to experience as the exchange rate is an important foundation of the UK economy.

2 Summer hols just got more expensive. When you travel abroad, your pounds will now buy you fewer euros or dollars, even if you did have the foresight to stock up on your travel money the week before the vote, as did so many. The cost of accommodation will also rise as you pay in pounds.

Tour operators can (and will) impose surcharges when the cost of a package holiday rises because of currency changes – even after your holiday’s been booked. Firms must absorb the first 2% of any loss they incur due to currency fluctuations, but you do have the right to cancel your trip if they attempt to put the charges up to 10%.

3 Fill your tank sooner, rather than later because you can expect increased prices of petrol of about 2p per litre. As petrol is purchased in US dollars, the poor dollar to sterling rate will be the first increase in UK prices. This will naturally have a knock-on effect as transporting goods around the country will become slightly more expensive.

4 Prices will remain stable in the short term-as retailers have purchased the foreign currency they need to import goods well in advance. Towards the end of 2016, the costs of imported goods will rise. The UK imported more than £474 bn of goods and services in 2015, mostly from Germany, China, the Netherlands, the United States and France.

Clothing and electrical goods, are largely imported from abroad, so if you’re putting off purchasing big price tag items in hopes of future bargains-don’t. Not everything in the shops will become more expensive though.

Good news? Fresh local fruit and veg are good for you, the local economy and your pocket- so now is the time to enjoy them. Food prices, in general should remain unchanged as much of it comes from the UK.

5 For those who have been shopping around for a better mortgage deal, now might be just the time to find a bargain. The bank of England is unlikely to raise interest rates, and may trim themas part of the “stimulus” they have promised. There are some sweet deals on today’s mortgage market, according to mark Harris, chief mortgage broker at SPF Private Clients: “Mortgage availability is good, banks still want to lend and may offer aggressive rate cuts.”