Britons dash to swop pounds for euros, US dollars before Brexit referendum, say high street exchanges

High street exchanges in the UK say more people are dashing to swap their pounds for euros and dollars ahead of the European Union referendum.
People queue for foreign exchange at a foreign exchange bureau in London, Britain on June 22, 2016.
People queue for foreign exchange at a foreign exchange bureau in London, Britain on June 22, 2016.PHOTO: REUTERS

LONDON (REUTERS) - Britons have flocked to swop their pounds for euros and United States dollars in the days running up to the European Union referendum, according to foreign exchange bureau companies on Wednesday (June 22).

Most forecasters expect the pound will fall sharply if there is a vote to leave the EU on Thursday, which would weaken the spending power of British holidaymakers abroad.

The sterling's value has fluctuated wildly based on results of opinion polls, which suggest the referendum result is too close to call.

Britain's Post Office said overall currency sales in its branches and online were up 74 per cent year-on-year since the weekend, while Travelex said online currency orders increased 30 per cent from June 14 to June 21.

Separately, money transfer company Azimo said it would suspend operations on the day of the referendum until the currency market settled down on Friday.

"While we can't say for sure, it's highly possible that this surge (in demand for foreign currency) is due to the uncertainty being fuelled (by) tomorrow's vote," said Mr David Swann, Travelex's head of pricing for the UK, Europe and the US.

The Post Office and Travelex said Britons' demand for foreign currency was split fairly evenly between euros and dollars.

For Tuesday alone, currency sales in Post Office branches were up 49 per cent from a year ago, and 381 per cent higher online.

"Despite the surge in demand, the Post Office confirms that it has ready availability of euros for purchase in its branches and online," it said in a statement. It did not specify the reason for the surge in demand.

Marks and Spencer Bank, which offers foreign exchange services in M&S department stores and online, said its foreign currency sales were about normal for the time of year.

Shifts in the value of sterling in the run-up to the referendum have caused a headache for British companies that trade in other countries, but especially for money transfer companies.

Azimo also said its Thursday suspension of operations was because uncertainty around the vote made it impossible to guarantee the safety of customers' money.

Azimo, Transferwise and other money transfer companies have halved the 5 per cent to 6 per cent in spread that banks charge for purchases of euros or other major currencies, leaving them exposed should sterling weaken 10 per cent or more, as many bankers have predicted it will on a vote to leave the EU.

The sterling rose on Wednesday, hovering below a 5.5-month high against the dollar, as investors made fewer bets against the pound just a day before the referendum.

One pound currently buys US$1.471 and 1.299 euros on the open market.