Exchanging foreign currency is the method by which one currency is traded for another. If you are planning to visit a country abroad you will need to exchange your home currency for the currency of your destination in order to purchase goods and services in that country.
How many dollars you will get for your pounds or any other currency for that matter is determined by the current exchange rate at that point in time. An exchange rate shows how much one currency is worth in terms of another. Exchange rates can change second by second and are affected by many different factors. Without getting too involved with the nitty gritty a currency will become more valuable as demand exceeds supply and will become less valuable as supply overtakes demand.
An increase in demand for any particular currency can be because transactional demand has increased or because speculative demand for that currency has gone up. The transactional demand is linked to a country’s Gross Domestic Product (GDP) and their level of business activity and employment levels. The more people employed in a country the more they have to spend on goods and services within that country. Central banks attempt to control speculative demand by adjusting interest rates. If a country is offering high interest rates investors will move their money into that country increasing the demand for that currency.
Your foreign exchange requirements
Whether you are looking to go on holiday, send money abroad, or even to buy a property you will be affected by exchange rates. How many Euros, Dollars or Turkish Lira you will get for your pound can and will vary!
Spend time looking at where the rate has been and this will help you to establish what kind of rate you should expect to receive. Unfortunately movements in exchange rates at almost impossible to predict therefore you can never be 100% certain on the rate you will get.
Visit our comparison tables to find out what rates and fees are being offered by the UK’s leading providers.
