Exchange rates fluctuate constantly, and where you exchange matters significantly. This comprehensive guide explains how exchange rates work, where to get the best deals, and how to save money whether you're travelling abroad or sending money internationally.
Understanding Exchange Rates
Buy Rate vs Sell Rate
- Buy rate: What you pay when buying foreign currency (selling GBP)
- Sell rate: What you receive when selling foreign currency (buying GBP)
- Spread: The difference between buy and sell rates—the provider's profit
Example: If mid-market is £1 = €1.17, a bureau might offer €1.12 (buy) and €1.22 (sell). The 10 cent spread is their margin.
Try Our Free Currency Converter
Get instant results with our Currency Converter. Also check our Inflation Calculator.
Popular GBP Exchange Rates
Indicative rates (actual rates change constantly):
| Currency | Code | Typical Rate | Popular For |
|---|---|---|---|
| US Dollar | USD | £1 = $1.25-1.30 | USA, Caribbean |
| Euro | EUR | £1 = €1.15-1.20 | Europe, Eurozone |
| Australian Dollar | AUD | £1 = A$1.90-2.00 | Australia |
| Canadian Dollar | CAD | £1 = C$1.70-1.80 | Canada |
| Japanese Yen | JPY | £1 = ¥185-195 | Japan |
| Swiss Franc | CHF | £1 = CHF 1.08-1.15 | Switzerland |
| UAE Dirham | AED | £1 = AED 4.60-4.80 | Dubai, UAE |
| Thai Baht | THB | £1 = ฿43-46 | Thailand |
| Turkish Lira | TRY | £1 = ₺40-45 | Turkey |
| Indian Rupee | INR | £1 = ₹105-110 | India |
Where to Exchange Currency
Options ranked roughly from best to worst rates:
| Option | Typical Margin | Convenience | Best For |
|---|---|---|---|
| Wise, Revolut (cards) | 0-0.5% | Instant via app | Spending abroad |
| Specialist FX brokers | 0.3-1% | Online transfer | Large transfers £1,000+ |
| Online travel money | 1-2% | Order online, collect | Cash for travel |
| Travel comparison sites | 1-3% | Find best deals | Comparing options |
| Supermarkets (Tesco, etc.) | 2-3% | Convenient | Last-minute, small amounts |
| Post Office | 2-4% | High street | Convenience |
| High street banks | 3-5% | Branch visit | Avoid if possible |
| Hotel currency exchange | 5-10% | On-site | Emergency only |
| Airport bureaux | 7-15% | Last resort | Absolute emergency |
Best Cards for Spending Abroad
Modern travel debit cards offer near-perfect exchange rates:
| Card | Exchange Rate | ATM Withdrawals | Other Benefits |
|---|---|---|---|
| Wise | Mid-market + small fee | £200/month free | Multi-currency account |
| Revolut | Mid-market (limits apply) | Free within limits | Budget tracking |
| Starling Bank | Mastercard rate, no fee | Free worldwide | Full UK bank account |
| Chase | Mastercard rate, no fee | Free | 1% cashback everywhere |
| Monzo | Mastercard rate, no fee | £200/month free | Instant notifications |
| Virgin Money | Mastercard rate, no fee | Free | Linked credit card |
International Money Transfers
For sending money abroad (e.g., property purchases, gifts, paying bills):
Transfer Providers Compared
| Provider | Best For | Typical Fee | Speed |
|---|---|---|---|
| Wise | Small-medium amounts | 0.35-1% | 1-2 days |
| OFX | Large transfers £5k+ | Negotiable | 1-3 days |
| Currencies Direct | Regular payments | Competitive | 1-3 days |
| TorFX | Large transfers, expats | Competitive | 1-3 days |
| XE | Medium transfers | Margin only | 1-4 days |
| Western Union | Cash pickup | Higher | Minutes-days |
| Bank transfer | Avoid | 3-5% + fees | 3-5 days |
Saving on Large Transfers
For amounts over £5,000:
- Contact specialist brokers for negotiated rates
- Compare at least 3 providers
- Consider timing—watch rate movements
- Use forward contracts to lock in rates
- Set up rate alerts for your target rate
Dynamic Currency Conversion (DCC) - Avoid!
When paying abroad by card, you may be asked: "Pay in pounds or local currency?"
Tips for Getting the Best Rates
- Plan ahead: Order travel money 1-2 weeks before travel for best rates
- Compare multiple sources: Use comparison sites to find deals
- Use travel cards: Wise, Starling, Chase for spending abroad
- Avoid airports: Rates are typically 10-15% worse
- Pay in local currency: Always, when given the choice
- Check for hidden fees: Some providers advertise 0% commission but have poor rates
- Don't buy back unused currency: Sell-back rates are terrible
- Consider pre-paid cards: Load at good rates, spend abroad
Quick Mental Conversion Tips
| Currency | Quick Estimate | Example |
|---|---|---|
| EUR → GBP | Subtract 15% | €100 ≈ £85 |
| USD → GBP | Subtract 20% | $100 ≈ £80 |
| AUD → GBP | Halve it | A$100 ≈ £50 |
| JPY → GBP | Divide by 190 | ¥10,000 ≈ £53 |
Frequently Asked Questions
The mid-market rate is the midpoint between buy and sell prices on global currency markets—the "true" exchange rate that banks use when trading. Any rate offered to consumers will be worse than this; the difference is how providers profit.
Specialist online providers (Wise, Revolut) offer rates closest to mid-market. Travel comparison sites find competitive high-street rates. Avoid airport bureaux, hotel exchanges, and using credit cards without fee-free foreign spending.
Order travel money online 1-2 weeks before for the best UK rates. Some countries offer better rates locally. Using a fee-free travel card abroad often beats both options for convenience and value.
DCC is when a foreign merchant charges you in GBP instead of local currency—their rate is typically 3-8% worse than your card's rate. Always choose LOCAL currency when paying abroad.
UK Currency Exchange: Practical Tips for British Travellers
For UK residents exchanging pounds sterling for foreign currencies, understanding the exchange rate landscape can save significant money. The pound sterling (GBP) is the world's oldest currency still in use, with a history stretching back over 1,200 years, and it remains the fourth most traded currency globally after the US dollar, euro, and Japanese yen. The Bank of England publishes daily exchange rates on its website, which serve as a reference point for the financial industry, though the rates available to consumers are always less favourable due to the spread charged by exchange providers.
Research by the consumer organisation Which? has consistently found that the worst places to exchange currency in the UK are airports, ferry terminals, and hotels, where the exchange rate markup can exceed 10% compared to the interbank rate. High street bureau de change outlets such as those found in major city centres typically offer better rates, but the best value is often found through specialist online currency services or travel-friendly bank cards. Providers like Wise (formerly TransferWise), Revolut, and Starling Bank offer exchange rates very close to the interbank mid-market rate, with transparent and minimal fees.
The Post Office remains one of the most popular currency exchange providers in the UK, with over 11,500 branches nationwide. While Post Office rates are not always the most competitive, their convenience and reliability make them a trusted option. Ordering currency online for collection or home delivery typically secures a better rate than walking into a branch. Additionally, the Travel Money Card offered by the Post Office and similar prepaid cards from other providers allow you to lock in exchange rates in advance and spend abroad without incurring foreign transaction fees.
When travelling from the UK, it is generally advisable to pay in the local currency rather than accepting Dynamic Currency Conversion (DCC), which allows merchants abroad to charge you in GBP. While DCC might seem convenient, it almost always results in a worse exchange rate than allowing your bank or card provider to perform the conversion. The Financial Conduct Authority (FCA) has highlighted DCC practices as an area where UK consumers frequently lose out, and recommends always choosing to pay in the local currency when given the option.
Frequently Asked Questions About Exchange Rates
What is the best way for UK residents to get a good exchange rate?
How has Brexit affected the pound sterling exchange rate?
Do UK banks charge fees for foreign currency transactions?
FCA-Regulated Currency Exchange Services in the UK
When exchanging currency in the United Kingdom, it is essential to use services that are authorised and regulated by the Financial Conduct Authority (FCA). The FCA maintains a public register of all authorised payment institutions, electronic money institutions, and money service businesses, which consumers can search online to verify that a currency exchange provider is legitimate. FCA regulation means that the provider must meet strict standards around anti-money laundering procedures, client money safeguarding, complaint handling, and transparent pricing. UK consumers who use an FCA-regulated provider also benefit from access to the Financial Ombudsman Service (FOS) if a dispute arises, providing an independent resolution pathway.
The landscape of UK currency exchange has transformed significantly in recent years, with digital-first providers offering rates that are substantially closer to the interbank mid-market rate than traditional high street bureaux de change. Providers such as Wise (formerly TransferWise), Revolut, and CurrencyFair are all FCA-authorised and typically charge transparent, low-percentage fees rather than hiding costs within inflated exchange rate margins. The FCA's Payment Services Regulations require all currency exchange providers to clearly disclose the total cost of a transaction before the customer commits, including both the exchange rate applied and any fees charged. For UK residents making regular international transfers, such as paying overseas mortgages, supporting family abroad, or receiving foreign income, comparing providers through FCA-regulated comparison services can save hundreds of pounds annually compared to using a traditional high street bank.
How UK Economic Events Influence Exchange Rates
Understanding the factors that drive exchange rate movements is particularly valuable for UK residents who travel, invest, or trade internationally. The value of the pound sterling against other currencies is influenced by a complex interplay of economic indicators, political developments, and market sentiment. Key UK economic releases that regularly move GBP exchange rates include the monthly Consumer Prices Index (CPI) inflation figures published by the Office for National Statistics, the Bank of England's interest rate decisions announced eight times per year, quarterly Gross Domestic Product (GDP) estimates, and the monthly labour market statistics covering employment, unemployment, and average earnings growth. Currency traders and analysts closely monitor these releases, and unexpected deviations from market consensus forecasts can trigger sharp movements in the pound's value.
Political events have also had a profound impact on sterling exchange rates in recent years. The 2016 EU referendum result caused the pound to fall by approximately 10 percent against the US dollar overnight, representing the largest single-day decline in the modern era of floating exchange rates. Subsequent Brexit-related negotiations, trade agreements, and regulatory divergence have continued to influence GBP volatility. For UK consumers and businesses, this underscores the importance of monitoring exchange rates carefully before making large currency conversions, and of considering tools such as forward contracts and rate alerts offered by FCA-regulated currency providers to lock in favourable rates or receive notifications when target rates are reached. The Bank of England publishes daily spot exchange rate data on its website, providing a reliable reference point for UK residents who need to track currency movements over time.
James Mitchell, ACCA
Chartered Accountant & Former HMRC Advisor
James is a Chartered Certified Accountant (ACCA) specialising in UK personal taxation and financial planning. With over 12 years in practice and a background as a former HMRC compliance officer, he brings authoritative insight to complex tax topics.