October 13, 2025

How a fall in the pound can affect your wallet

The pound fell in value against both the US dollar and the euro in September 2025, as markets reacted to concerns about economic growth and interest rate expectations. While these movements can seem distant or abstract, a weaker pound has real effects on everyday finances — from the cost of holidays abroad to the performance of pensions and investments.

Here’s how the recent decline in sterling could affect you.

Travel abroad

If you’re heading overseas, a weaker pound makes travel more expensive. Exchange rates determine how much local currency you receive for your pounds — so when sterling falls, your money buys less.

Trips to Europe or the US can quickly become pricier, from hotel stays and meals out to activities and excursions. If you’re planning travel soon, consider booking ahead or using a prepaid travel money card to lock in current exchange rates and avoid potential future losses.

Imports and shopping

A weaker pound also raises the cost of imported goods and can add pressure to inflation — as seen in 2017 following the EU Referendum.

Many everyday products in UK shops are sourced from abroad, including food, clothing, and electronics. When sterling loses value, import costs rise, and some of these increases are passed on to consumers.

Inflation remains elevated at just under 4%, according to the Office for National Statistics (ONS), meaning any further weakness in the pound could keep prices higher for longer.

Investments and pensions

For investors, currency fluctuations can have mixed results. UK-based investors holding overseas shares or funds may see foreign investments rise in value when converted back into pounds, as overseas earnings become worth more.

However, companies that rely on imported materials or goods face higher costs, which can impact profits and share prices. Pension funds and long-term investors may also see some short-term movement, although most portfolios are structured to smooth out volatility over time.

Why it matters

Exchange rates are influenced by a range of factors — central bank policy, economic performance, and global market confidence. While the pound has fallen recently, this trend won’t necessarily continue indefinitely; currencies naturally fluctuate over time.

It’s also worth noting that sterling remains much stronger than during the 2022 “mini-Budget” crisis under former Prime Minister Liz Truss.

So, while the latest fall isn’t cause for alarm, it is a reminder that currency shifts can affect daily spending, investment returns, and household budgets.

If you’re concerned about how exchange rate movements might impact your portfolio or savings, it may be a good time to speak with your adviser.

At Aetas Wealth, we can help assess any risks in your financial plan and develop strategies to protect your money from market volatility and currency fluctuations. Whether you need to write or update your will, protect your assets, or simply gain peace of mind, sometimes all it takes is a fresh pair of eyes – Book a meeting or request a callback from one of our experienced team to review your plans.

Sources:

  • The Guardian – UK hit by fresh sell-off in government bond markets as pound weakens: https://www.theguardian.com/business/2025/sep/02/uk-hit-by-fresh-sell-off-in-government-bond-markets-as-pound-weakens
  • The Guardian – Weak pound fuels inflation concerns post-Brexit: https://www.theguardian.com/business/2017/jan/25/brexit-economy-weak-pound-inflation-jobs-market
  • ONS – Consumer Price Inflation, July 2025: https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/july2025

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