The fall in the strength of pound sterling has had a mixed impact on the fortunes of British people living abroad, with many suffering due to a decline in the currency.
The vote to leave the European Union last June saw the value of the pound plummet and it is yet to recover. By the end of 2016, sterling was down compared to 56 of the 60 major currencies currencies surveyed by Lloyds Bank.
The pound lost at least a fifth of its value against nine currencies in 2016 with the biggest declines coming against the Brazilian real (-28.4%), the Russian rouble (-28.0%) and the Icelandic krona (-27.9%).
The falling value of the pound brings good and bad news for British expats. Those earning in a foreign currency and sending money back to Britain are benefitting from a much more favourable rate.
However, Brits who have retired abroad and have pensions paid in sterling are suffering a cut in real income. It is also bad news for people looking to holiday abroad as the pound is now worth less when converted into local currency.
The only currencies the pound improved against were the Egyptian pound (+105.8%), the Mozambique metical (+23.0%) and the Turkish lira (+0.3%). The dramatic rise versus the Egyptian currency was largely due to the Egyptian government’s economic reforms, which included removing the tie between it and the US dollar.
Peter Reid, expatriate banking director at Lloyds Private Banking, says: “The pound’s decline is bad news for British holidaymakers, with most destinations becoming more expensive in 2016. Many British expats will also 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.”