8 June 2012

American car hire costs expected to rise as the pound-dollar exchange rate deteriorates

Holidaymakers heading to the USA this year could face an expensive holiday bill as the pound has slumped against the dollar.

The pound might be at a three year high against the euro, but it has become significantly weaker against the dollar. Those looking to rent a car in America might want to book before departing in order to make the most of their cash.

The pound sterling has reached the lowest level against the U.S dollar this year, according to figures from the Post Office.

In the past, British holidaymakers have been able to enjoy a stronger pound against the dollar. However, Brits heading to America this summer will have 7.2% fewer dollars compared to 2011.

The fall also means that holidaymakers from the UK will have 29% fewer dollars to spend than in 2007, when the pound was worth 2.0 dollars.

"Just a month ago sterling was on the rise against the dollar but it has fallen back steadily ever since and is now worth 6 per cent less than in early May,” commented Andrew Brown, Post Office Travel Money head.

"You would have to go back to the beginning of the year to see such a low rate and if the pound falls further, it will be at its lowest value against the dollar for two years,” added Brown.

The decline in value means that a family taking £500 in spending money to the United States will have $55 less than a year ago. This could make a significant dent in the holiday spending budget.

Travelling by car is commonplace in the U.S.A unless staying in a city. Whilst the majority of roads are wider than those in the UK, accidents can still occur. It could be advisable to take out rental car insurance if hiring a vehicle in America.