Britons dash for euros and dollars as EU vote nears

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Published: June 22, 2016 9:59:44 PM

Britons have flocked to swap their pounds for euros and U.S. dollars in the days running up to the European Union referendum, high street foreign exchange companies said on Wednesday.

Britons have flocked to swap their pounds for euros and U.S. dollars in the days running up to the European Union referendum, high street foreign exchange companies said on Wednesday.

Most forecasters expect the pound to fall sharply if there is a vote to leave the EU on Thursday, which would weaken the spending power of British holidaymakers abroad.

Sterling’s value has fluctuated wildly based on opinion polls although recent readings the referendum result is too close to call.

The Post Office said overall currency sales in its branches and online were up 74 percent year-on-year since the weekend, with Tuesday sales 49 percent higher in branch and 381 percent higher online than on the same day a year ago.

Travelex said its online currency orders had increased by 30 percent from June 14 to June 21.

Queuing alongside a dozen others at a foreign exchange shop near Liverpool Street station in London, caretaker John Murphy, 67, and IT manager Richard Bailey, 44, both said they expected the pound to fall sharply if Britons vote “Out”.

“We’re going away in September so I’m buying euros for that because I think the pound’s going to go down,” Murphy said.

Demand was split fairly evenly between euros and dollars, the Post Office and Travelex said.

“While we can’t say for sure, it’s highly possible that this surge is due to the uncertainty being fuelled (by) tomorrow’s vote,” said David Swann, head of pricing for the UK, Europe and the United States at Travelex.

Marks and Spencer Bank, which offers foreign exchange services in M&S department stores and online, said its foreign currency sales were about normal for the time of year.

Shifts in the value of sterling in the run-up to the referendum have caused a headache for British companies that trade in other countries, but especially for money transfer companies such as Azimo and Transferwise.

They have halved the 5-6 percent in spread that banks charge for purchases of euros or other major currencies, leaving them exposed should sterling weaken by 10 percent or more, as many bankers have predicted it will on a vote to leave the EU.

Azimo said it will suspend operations on Thursday due to market volatility and because uncertainty around the vote would make it impossible to guarantee the safety of customers’ money.

Sterling rose on Wednesday, hovering below a 5-1/2-month high against the dollar, as investors made fewer bets against the pound just a day before the referendum.

One pound currently buys $1.471 and 1.299 euros on the open market.

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