U.S. airmen can only pay more as dollar gets beaten by U.K. currency
RAF MILDENHALL, England — The British pound surged Tuesday, passing the $2 point in the commercial exchange rate and further cutting into the spending power of Americans living in England.
The pound rose as high as $2.0133 early Wednesday, according to media reports, the currency’s strongest showing since 1981. The $2 threshold had not been breached since 1992.
The prospect of a rise in the U.K. interest rate in the near term was one of the main catalysts for the pound breaking the $2 threshold, according to an analysis on the Web site of Global Insight, a financial firm.
The pound had threatened to crack the barrier earlier this year, the Web site states, but the new potential rise in the U.K. interest rates was what sent the sterling through the roof.
The pound’s rise is also a symptom of the dollar’s weakness, which is currently trading at a two-year low against the euro, according to Global Insight.
The pound is expected to stay at or above the $2 mark for the foreseeable future.
But behind all the numbers, speculation and trading frenzies, Air Force communities in England are seeing the buying power of their money outside the fence withering.
“I compare it to the gas prices,” Airman 1st Class Thomas Vogliardo said Wednesday at RAF Mil- denhall.
“You gotta pay it. There’s no point in getting [mad] about it, but yeah, it sucks.”
Since arriving in the country about a year ago, Kelly O’Sullivan and her Air Force husband have had to curtail their socializing and disposable income in the face of the mighty British pound.
“We quit going out altogether,” said Kelly O’Sullivan, who works at a British-run concessionaire at Mildenhall and gets paid in pounds. “We do that once every few months. And we do cheap things on base and free things off-base.”
“I just try not to spend too much,” Airman 1st Class Larry Mullikin said.
And despite the further devaluation of their dollar this week, airmen and their families looking for immediate relief from their cost-of-living allowance will have to be patient.
Information used to set the COLA rate for the second half of April won’t be analyzed until next week, likely around Wednesday, when the Per Diem Committee in Washington will look back on the previous two weeks to see if the rate needs to be adjusted, said Master Sgt. Scott Husted, the financial services officer for the 48th Comptroller Squadron at RAF Lakenheath.
For the committee to even consider a boost in COLA based on exchange rate increases — or decreases — the exchange rate has to fluctuate by at least 5 percent. A pound worth $1.95, for example, would have to go up by at least nine cents to $2.04 before the threshold was met.
Even if the benchmark is reached, however, it takes time for a COLA change to show up in airmen’s paychecks.
“It’s typically a two-week lag,” Husted said.
But regardless of long-winded COLA explanations and economic rigmarole, personnel like Vogliardo said Wednesday that they will deal with the decreasing value of their paychecks as best they can.
“I like to have fun, but I also like to watch my money,” he said. “Every time I take 40 pounds out, I think, ‘Oh geez, it’s like 80 freakin’ dollars!’ ”