This week the Bank of England voted to keep interest rates the same. The currency market tends to focus on how many members of the committee vote one way or the other and this week it was 9-0.
At the time of writing (Friday) the pound is down against the euro at 1.1330 and against the US dollar at 1.337 while the euro is at 1.18 against the US dollar. In the run-up to Christmas the markets aren’t expecting any dramatic data so it is likely to be political events affecting exchange rates.
Whatever the market rate, what is the rate you get? You certainly won’t get the rate you see online or on your iPhone. For a start there is a buy and a sell rate in the market so if you see just one rate, that will be in the middle of the buy and sell. How close you get to the market rate depends on the amount you are buying – so for a few hundred euros at the airport you could be as much as 10% away from the market, while a hundred thousand euros would be nearer to 2% at your bank or less than 1% at a broker.
The phrase ‘no commission’ is nonsense as the actual commission is hidden in the exchange rate. How much depends on your bank and the expensive rent a Bureau de Change has to pay at the airport. Using a broker often saves you money on large transactions.
Written by www.thecurrencyexchange.co.uk