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Surge in travellers buying holiday money before EU vote

Surge in travellers buying holiday money before EU voteHolidaymakers nervous about what may happen to the pound after Thursday’s EU referendum are rushing to stock up on foreign currency, with the Post Office reporting a 380% surge in online orders.

The Post Office, which accounts for one in four of all UK foreign exchange transactions, said currency sales had risen by 74% year on year since the weekend.

It said branch sales were up by 48.8% on the same period a year ago, while online purchases had increased by 381%.

The pound has made some gains in recent days and continued to creep higher on Wednesday. In August 2015, £1 bought about €1.42; last week it was about €1.26, while on Monday it was €1.29, and at lunchtime on Wednesday 22 June it was €1.30.

A vote to leave the EU could cause the pound to plummet. In February, investment bank Goldman Sachs claimed the value of sterling could fall by up to 20%.

A surge in transactions was also reported by FairFX, which specialises in prepaid currency cards that can be loaded with money in advance and allow people to lock into a rate now. It said many people heading to Europe or the US in the coming weeks were buying now to guarantee their exchange rate ahead of the referendum result.

FairFX said the amounts being loaded on to US dollar cards, plus orders of dollar banknotes, were up almost 300% this week compared with the start of last week. It has also seen a 100%-plus increase in euro cards being loaded over the same period.

The firm said that while many holidaymakers appeared keen to buy now to pin down their exchange rate, on the corporate side there had been a slowdown. Ian Strafford-Taylor, chief executive of FairFX, said: “While it is impossible to predict, the behaviour we’ve seen with optimistic clients and strong momentum from the remain campaign seems to have clients confident that the pound will see a relief rally following a clear win for remain. Some suggest we could see the pound strengthen as much as 5% following the results from Thursday’s referendum.”

On Monday, Caxton FX, another foreign exchange specialist, said this year people were buying holiday money in smaller amounts but more frequently.

Analysis of its customer data showed that the average amount of euros loaded on to a prepaid card in a single transaction had fallen this year, though the overall amount loaded had increased, as people were doing more top-ups. The firm said: “This suggests people are nervous about what is happening to the euro in the run-up to the referendum and are holding off buying too much in one go.”
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