expat network

British Expats With Sterling Incomes Feel The Pinch

Greater economic uncertainty has contributed to the pound declining in value against the majority of major currencies in the past year, according to latest research from Lloyds Private Banking. Over the past 12 months, the pound has fallen in value – to varying degrees – against 56 of the 60 currencies analysed.

This followed a good year for the pound in 2015 when sterling gained in value against more than three-quarters of the currencies surveyed. Overall, the pound has fallen by 11% against a trade-weighted basket of currencies over the past two years.

The pound lost at least a fifth of its value against nine major currencies. The biggest declines were against the Brazilian real (-28.4%), Russian rouble (-28.0%) and the Icelandic krona (-27.9%).

Peter Reid, expatriate banking director at Lloyds Private Banking, said: “Many British expats will be feeling the pinch; those with incomes in sterling such as pensioners are getting fewer pounds when converting their money. However, on the other end of the bargain, British expats living and working abroad and earning in foreign currencies are now getting more pounds for their money and they are seeing their spending power surge when they head back to the UK.”

The pound made significant gains against two currencies during 2016: the Egyptian pound (+105.8%) and the Mozambique metical (+23.0%). The pound lost value against all but one of the currencies of the G20 group of economies in 2016. The sole exception was the Turkish lira (+0.3%).

The pound fell by 17% against the US dollar over the year, from $1.49 to $1.24; taking the pound to its lowest year end level against the dollar since 1984.

Sterling declined by less against the euro (-13.3%) as the eurozone economy continued to struggle to gather pace with the European Central Bank (ECB) easing monetary policy further in 2016.

The pound decreased in value by 11% against the Chinese renminbi as mounting concerns about the sustainability of the build-up in debt in China and doubts about the economy’s ability to maintain recent growth rates limited the pound’s losses against the Chinese currency.