On Monday, Raphael Bostic, a top official at the US Fed, warned that the tax overhaul had “really increased uncertainty” and raised the risk of a global recession. The pound’s plummeting value indicates that investors are concerned about the UK’s ability to manage so much extra debt, especially as rising interest rates make borrowing much more costly. When demand for a particular currency is high, the price goes up and vice versa. UK Chancellor of the Exchequer Kwasi Kwarteng has proposed the biggest tax cuts in 50 years Īs with other goods and services, the value of most of the world’s major currencies operates on the principle of supply and demand. The tax cuts, along with a plan to support households in dealing with their rising energy bills, will require the government to borrow an extra 72 billion pounds ($77.7bn) in the next six months alone. Under Chancellor of the Exchequer Kwasi Kwarteng’s “mini-budget” announced on Friday, the UK is proposing the biggest tax cuts in 50 years, including abolishing the 45 percent tax rate on incomes over 150,000 pounds ($162,000). The price of 5-year UK bonds – through which investors loan money to the government – recorded the sharpest fall since at least 1991. On Monday, the pound sank to a record low against the US dollar as investors rushed to sell the currency and government bonds in a demonstration of scepticism over new Prime Minister Liz Truss’s economic plans, which include large tax cuts funded by steep increases in government borrowing.Īt one point in Asian trading, the pound sank as low as $1.0327, surpassing the previous record low reached in 1985, before making back some of its value. The convenience of the debit/credit cards over hunting down the "best exchange rate" does it for me.As the British pound plummets in value, the United States dollar is flying high.Īgainst a tumultuous backdrop that includes the Ukraine war, soaring prices and China’s COVID lockdowns, sharp fluctuations of some of the world’s major currencies are injecting new uncertainty into the global economic outlook. I think the bottom line is that you are going to have to pay to use your dollars in Britain one way or the other, whether its changing actual cash or having your credit card company do the changing just try to make the most sensible decision you can and then don't worry about a few dollars. Capital One offers a Visa card with no foreign transaction fees, but I always wonder (although I use it) whether they make up for it in conversion rates. Again, you'd need a 4 digit PIN and do make sure your bank is notified of your travel plans. But I do travel with two as sometimes there can be a snafu, usually originating with my bank! As a rule prepaid cards don't offer very good value once fees and conversion charges are figured in-credit and debit cards are better IMO. Ii usually bring about $200 in emergency cash but I've never had to use it-my non-chip debit card works fine in all the ATMS I've used. The manager knew how to handle it though. Just be prepared to explain that it is a chip and sig card as I did have one person who was confused by it. I don't really think it's necessary at this point, however. USAA has a chip and pin card which I used last summer and it worked fine (I couldn't remember the pin on our trip in Jan.) but I think you have to be current or former military or have an immediate family member in the military to get it now. I used my Chase one all over London and on some day trips out of London and it worked fine. There's a shipping fee to order online.Ĭhase and Citibank both have chip and signature cards. You can go into a travel agent office or order online. For that reason I like to have some currency when I arrive. I have 2 cards with 2 different banks as I have had problems with the card not being authorized by my bank for use overseas. Neither of my debit cards have a chip, but they still work in ATMs. You need to check with your bank regarding fees.
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