Stronger Australian Dollar Lowers Costs for Europe Trips

Travellers planning trips to Europe now face lower costs as the Australian dollar strengthens against the Euro and British pound.

Updated on Oct. 20, 2026 in Australia and New Zealand

Screen-print poster illustration of a vintage leather suitcase on a dock, with a distant European cathedral silhouette, evoking affordable travel. — The Australian dollar's 11.7 percent rise against the Euro has significantly reduced travel costs for Australians planning trips to Europe. AI Illustration. Upload story photo >

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The Australian dollar has risen 11.7 percent against the Euro over the past year, significantly reducing the cost of travel for Australians abroad. A holiday priced at 10,000 Euro now costs 16,000 Australian dollars, down from 18,160 Australian dollars in October 2025.

Why it matters

This shift in purchasing power is driven by a widening interest-rate differential between Australia and Europe, as interest rate trends diverge between the two regions. The cost reduction makes European destinations more affordable for Australians planning travel during the current period.

As of October 2026, the Australian dollar buys 62.3 Euro cents and 52.6 British pence, representing gains of 11.7 percent and 8 percent respectively over the last 12 months. This reflects a substantial increase in buying power for Australians visiting Europe or the UK.

The players

Reserve Bank of Australia

This is Australia's central bank, which is responsible for setting monetary policy and the national cash rate.

European Central Bank

This institution manages the monetary policy of the Eurozone and sets benchmark interest rates for member nations.

The details

The strengthening of the local currency stems from the Reserve Bank of Australia raising its cash rate four times in 2026, while the European Central Bank cut rates eight times throughout 2024 and 2025. Market pricing currently indicates a 74 percent probability that the Reserve Bank of Australia will maintain the current cash rate in its November meeting.

2024 and 2025 saw the European Central Bank cut interest rates eight times.
October 2025 served as the baseline for comparing currency valuations and holiday costs.
October 2026 marks the current period for updated currency exchange and travel expense figures.
3 November 2026 is the expected date for the Reserve Bank of Australia interest rate decision.

Travel Outlook

This currency shift aligns with the broader monetary divergence between Australia and the Eurozone, which has consistently favoured the Australian dollar throughout 2026. Historically, such significant interest rate spreads create predictable fluctuations in travel affordability for Australians heading to European destinations.

Travellers should note that the current exchange rate provides immediate savings when booking accommodation or activities priced in Euros for upcoming trips. Monitoring the Reserve Bank of Australia's November decision may provide insight into whether these favourable currency conditions will persist into the new year.

The takeaway

The favourable interest rate environment has made European travel significantly cheaper for Australians compared to last year. Travellers should take advantage of the current exchange rate while the interest rate gap remains wide.

What happens next

The Reserve Bank of Australia is scheduled to meet on 3 November 2026, where markets anticipate a 74 percent probability that officials will hold the cash rate at 4.65 percent.