From a technical perspective we look at the exchange rate we might get in four very different holiday destinations, studying their outlook over the short and medium term.
Against the euro I'm sure readers will be only too well aware that at £0.6930 (€1.4430) sterling is stronger than it has been since November 2007. Technical analysis suggests there is still a bit more to go for, the euro dropping to a measured target at £0.6550 (€1.5265). Note that the record low was set in May 2000 when one needed just 56.75p to buy oneself a euro, a move that cannot be ruled out.
Euro/sterling
The trend is not due just to euro weakness because on the Bank of England's trade-weighted basis the pound has recouped two-thirds of the losses suffered during the financial crisis (caused by the country's perceived over-reliance on financial services). Currently standing at 94.50, we believe sterling might gain another 5 per cent or so, taking it up to the psychological level at 100.00 (from where it slumped in December 2007).
Antipodeans who came to work in the UK and found themselves priced out of their native residential property markets, also have reason to cheer. Both central banks have explicitly tried to weaken the Australian and New Zealand dollars to help their ailing commodity industries. From Australian $3.00 per pound in 2001 sterling slumped close to a record low at A$1.44 by June 2013. Now back above A$2.00 (A$2.12 high at the time of writing), the sums are a lot more favourable for those wishing to return home and for those planning a visit. Over the next six months or so we believe there is a chance that we might continue on rallying to the A$2.40 area. But serious resistance lies around A$2.65, so don't be greedy.
Sterling/Australian dollar
The decline in oil prices has, not surprisingly, hit the Norwegian krone. Never exactly a reasonable holiday destination, but an interesting one nevertheless, the exchange rate has swung between 8.50 and 13.50 per pound over the last 40 years or so. Currently trading above 12.80, it has only ever been this high on half-a-dozen previous occasions. Tied tightly to the Swedish exchange rate, travellers will find that their pound goes a lot further than it used to in Sweden, too. Currently 13.50 to the pound, we believe it will fairly soon hit 14.25 and could match the record high at 15.93 set in 2001. In order to do so it must hold above 12.35 for the remainder of this year. Two trips not to be missed.
Sterling/Norwegian krone
Finally, a look at how far our money might go in Japan - as we all know about prime minister Abe's three economic arrows, one being a weak currency. From a postwar low of 117 yen per pound in 2011, we are now very close to 200; a 70 per cent depreciation is not to be sniffed at. It might move on a little further but above 225/235 yen is unlikely to be sustainable. Go while it lasts!
Sterling/Japanese yen
