What is the mid-market rate?

The mid-market rate is the midpoint between the bid (buy) and ask (sell) prices on the global forex market. It is the fairest benchmark rate and the one shown on Google, XE, and Reuters. No provider can offer this rate to consumers because they must add a margin to cover costs and profit.

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How to Calculate Exchange Rates (And Spot Hidden Costs)

Q: Why is the rate my bank gives me different from Google?

Google shows the mid-market rate (the midpoint between buy and sell prices). Your bank adds a markup of 2.5-4% on top, plus a flat fee of £9-£25. A specialist provider typically adds only 0.3-0.8% with no fee.

Q: How do I calculate the margin my provider is charging?

Find the mid-market rate on Google or XE, then get your provider’s quoted rate. The formula is: (Mid-market rate − Provider rate) ÷ Mid-market rate × 100 = Margin %. For example, if mid-market is 1.1740 and your bank offers 1.1350, the margin is (1.1740 − 1.1350) ÷ 1.1740 × 100 = 3.32%.

Q: What is a cross rate and when do I need one?

A cross rate lets you calculate an exchange rate between two currencies when only their rates against a common third currency (usually USD) are available. Formula: Currency A/USD ÷ Currency B/USD = Currency A/Currency B. For example, if GBP/USD = 1.263 and THB/USD = 0.0287, then GBP/THB = 1.263 ÷ 0.0287 = 44.01.

Q: When is the best time to make a transfer?

Tuesday to Thursday during London-New York overlap (1pm-4pm GMT) typically offers the tightest spreads and best liquidity. Avoid weekends when fintech apps add 0.5-1.5% surcharges, and Fridays after 3pm GMT when traders close positions and spreads widen.

Q: Which exchange rate should I use for my UK tax return?

HMRC publishes official monthly exchange rates for tax returns, customs declarations, and VAT. You should use the HMRC rate for the month the income was received or the transaction occurred. These are available free on gov.uk.

The exchange rate your bank shows you is not the real rate. We explain the formulas, show you how to calculate margins, and reveal what 10 providers actually charge -- with an interactive calculator and worked examples at every step.

Matt WoodleyFounder & Editor

Updated 21 Feb 2026 · 18 min read

Interactive calculator 10 providers compared Real margin data

The bottom line

Converting currencies uses one simple formula: Amount x Rate = Converted Amount. The hard part is not the maths -- it's knowing which rate to use. Your bank's rate includes a 2.5-4% hidden markup over the mid-market rate. A specialist provider's markup is 0.3-0.8%. On a £50,000 transfer, that's the difference between paying £160 and £1,750 in conversion costs.

The Two Formulas You Need

Every exchange rate calculation comes down to one of two directions. Once you know which direction you're going, the formula is identical every time.

GBP to foreign currency

GBP amount x rate = foreign amount

Example: You want to send £5,000 to Europe

£5,000 x 1.1740 = €5,870

At the mid-market rate, your £5,000 buys €5,870.

Foreign currency to GBP

foreign amount ÷ rate = GBP amount

Example: You're receiving €50,000 from a property sale

€50,000 ÷ 1.1740 = £42,589.44

Your €50,000 converts to £42,589.44 at mid-market.

The one thing to remember

If the rate is quoted as GBP/EUR 1.1740, it means 1 GBP buys 1.1740 EUR. The first currency in the pair is always '1' and the second is the rate. Sending GBP abroad? Multiply. Receiving foreign currency into GBP? Divide. That's it.

Try It: Interactive Exchange Rate Calculator

Select your currency pair, choose your amount, and see the formula in action. The table below the result shows what you'd actually receive via different provider types -- revealing the real cost of each route.

The Mid-Market Rate: Why Google's Rate Is Not What You'll Get

When you Google 'GBP to EUR', the rate you see is the mid-market rate -- the midpoint between the bid (buy) and ask (sell) prices on the global forex market. It's the fairest benchmark available. For a deeper dive, read our full guide to the mid-market rate.

How bid, ask and mid-market work:

Bid (banks buy EUR)

1.1720

Mid-market

1.1740

Ask (banks sell EUR)

1.1760

The spread between bid and ask is just 0.17% -- the interbank cost. Your bank adds a further 2.5-4% markup on top.

No consumer can trade at the mid-market rate -- it's the wholesale interbank price. Every provider adds a margin. The question is how much they add. The margin formula below lets you calculate exactly what any provider is charging.

How to Calculate What Your Provider Is Really Charging

This is the single most useful calculation for anyone making international transfers. It exposes the hidden cost your provider doesn't want you to see.

The margin formula

(Mid-market rate - Provider rate) ÷ Mid-market rate × 100 = Margin %

Worked example: checking your bank's margin

Google 'GBP to EUR': mid-market rate is 1.1740

Log into your bank: their rate for GBP/EUR is 1.1350

Calculate: (1.1740 - 1.1350) ÷ 1.1740 × 100 = 3.32%

Your bank is charging a 3.32% margin. On a £50,000 transfer, that's £1,660 in hidden FX cost -- before their £25 fee.

Same transfer via a currency broker:

Mid-market rate: 1.1740

Broker rate: 1.1690 (no fee)

Calculate: (1.1740 - 1.1690) ÷ 1.1740 × 100 = 0.43%

Total cost: £215. You just saved £1,470 versus the bank.

Cross Rates: How to Calculate Exotic Pairs

Not every currency pair is quoted directly. If you need GBP/THB (Thai Baht) or GBP/ZAR (South African Rand), you may need to calculate a cross rate -- using USD as the bridge currency. For guidance on which providers handle exotic currencies best, see our top 10 money transfer companies.

Cross rate formula

GBP/USD ÷ Target/USD = GBP/Target

Worked example: GBP to Thai Baht

Step 1: Find GBP/USD = 1.2630

Step 2: Find THB/USD = 0.02872 (i.e. 1 THB = $0.02872)

Step 3: Cross rate: 1.2630 ÷ 0.02872 = 43.98 GBP/THB

So £1,000 = THB 43,980 at mid-market.

Cross rates add an extra conversion step, which means an extra margin layer. For exotic pairs, currency brokers typically offer tighter cross-rate spreads than banks because they access wholesale markets directly.

What 10 Providers Actually Charge: Real Margin Data

Theory is useful, but the real value is knowing what each provider charges in practice. This table shows the typical exchange rate margin, flat fees, and total cost at two transfer sizes for a GBP to EUR transfer. For detailed provider analysis, read our best currency brokers guide.

Provider	Type	Margin	Fee	Cost on £10K	Cost on £100K	Verdict
Wise	Fintech	0.43%	£0-2	£45	£430	Best under £5K
Currencies Direct	Broker	0.3-0.7%	£0	£40	£350	Best over £10K
OFX	Broker	0.4-0.8%	£0	£50	£400	Best for business
TorFX	Broker	0.3-0.6%	£0	£40	£330	Best personal service
Revolut (free)	Fintech	0.5%	£0	£50	£500	Best for small/frequent
PayPal	Digital	3.5%	£2.99	£353	£3,503	Avoid for FX
HSBC	Bank	3.0-4.0%	£25	£325	£3,025	Convenience only
Barclays	Bank	2.8-3.8%	£25	£305	£2,825	Convenience only
Lloyds	Bank	2.7-3.5%	£9.50	£280	£2,710	Convenience only
NatWest	Bank	3.0-4.0%	£20	£320	£3,020	Convenience only

Costs are indicative based on typical GBP/EUR transfers. Broker margins vary by transfer size and relationship -- larger transfers typically attract tighter margins. Data as of February 2026.

When to Convert: Day-by-Day Analysis

Exchange rates move constantly, but certain days and times consistently offer better conditions. The forex market operates 24 hours Monday to Friday across three main sessions: Asian (midnight-8am GMT), London (8am-4pm), and New York (1pm-9pm). Overlap periods have the highest liquidity and tightest spreads.

Day	Quality	What happens
Monday	Average	Asian session open may set direction for the week; often volatile first 2 hours
Tuesday	Good	London and NY sessions overlap; strong liquidity, tighter spreads
Wednesday	Best	Peak global liquidity. Central bank announcements (Fed, BoE) often midweek
Thursday	Good	Strong liquidity continues; major economic data releases (GDP, jobs)
Friday	Average	Traders close positions before weekend; wider spreads after 3pm GMT
Weekend	Worst	Forex market closed. Fintech apps add 0.5-1.5% weekend surcharge

Best window for UK transfers

Tuesday to Thursday, 1pm-4pm GMT (London/NY overlap) typically offers the tightest spreads. If you're using Wise or Revolut, avoid weekends entirely -- both add a 0.5-1.5% surcharge when forex markets are closed. For large transfers where timing matters, a forward contract lets you lock in a rate for up to 24 months.

HMRC Exchange Rates: For Tax Returns and Customs

If you're converting foreign income for a UK tax return, customs declaration, or VAT calculation, you should use HMRC's official monthly exchange rates -- not Google or XE. These are published on gov.uk and are the rates HMRC will accept in your Self Assessment.

Currency	HMRC rate (per £1)	Common use
EUR	1.1740	Tax returns, VAT, customs
USD	1.2630	Tax returns, invoicing
AUD	1.9420	Pension, capital gains
CAD	1.8130	Pension, capital gains
INR	106.42	Rental income, gifts
AED	4.6380	Employment income
ZAR	23.12	Capital gains, pensions
CHF	1.1170	Tax returns, invoicing

Rates shown are HMRC monthly averages for February 2026. Use the rate for the month the income was received or the transaction occurred.

6 Exchange Rate Traps to Avoid

We've reviewed thousands of international transfers. These are the six most expensive mistakes people make -- and how to avoid each one.

Trap 1: Assuming "no fee" means free

The fix: A provider that charges "no fee" but marks up the exchange rate by 3% costs more than one that charges a £5 fee with a 0.4% margin. Always calculate the total cost: margin cost + fees.

Trap 2: Using your bank by default

The fix: UK banks charge 2.5-4% margins plus £9-£25 per transfer. A specialist provider charges 0.3-0.8% with no fee. On £10,000, you'd save £200-350.

Trap 3: Converting at the airport

The fix: Airport bureaux charge 8-12% margins -- the worst rate available anywhere. Even converting £200 costs £16-24 more than it should. Use a multi-currency card instead.

Trap 4: Converting on a weekend

The fix: Wise and Revolut add 0.5-1.5% weekend surcharges because forex markets are closed. Schedule transfers for midweek for the best rates.

Trap 5: Choosing "pay in GBP" abroad (DCC)

The fix: Dynamic Currency Conversion lets the merchant's terminal do the conversion at a 3-8% markup. Always choose to pay in the local currency and let your bank handle the conversion at a lower rate.

Trap 6: Not locking in a rate for future transfers

The fix: If your transfer is weeks or months away, exchange rates can move 5-10%. A forward contract locks in today's rate for up to 24 months. See our guide to forward contracts for details.

Flexible vs Fixed Exchange Rates: What It Means for Your Transfer

Most currencies you'll encounter use one of two systems. Understanding which applies affects how you plan and time your transfer.

Floating (flexible) rates

Determined by supply and demand on the forex market. GBP, EUR, USD, AUD, CAD all float. Rates change every second during market hours.

Impact: The amount your recipient gets can vary between when you check the rate and when the transfer is processed. Use rate alerts or forward contracts to manage this risk.

Fixed (pegged) rates

Pegged to a major currency (usually USD) by the country's central bank. AED, SAR, HKD, QAR, PAB are pegged.

Impact: The exchange rate is predictable. Sending GBP to AED, the only variable is the GBP/USD rate (since AED tracks USD at 3.6725). This makes planning easier.

For transfers to pegged-currency countries, the calculation simplifies. To estimate GBP to AED: find GBP/USD on Google, then multiply by 3.6725. For countries with managed floats (like China's CNY), the rate is less predictable than a peg but less volatile than a pure float.

The 5-Step Rate Check: Do This Before Every Transfer

Use this process every time you make an international transfer. It takes 3 minutes and can save you hundreds of pounds. For a more detailed comparison process, see our top 10 providers guide.

Find the mid-market rate

Google "GBP to [currency]". This is your benchmark -- the fairest rate available. Write it down.

Get your provider’s quoted rate

Log into your bank or provider. Find the rate they’re offering for your specific amount. Don’t trust the "indicative rate" -- enter the actual transfer amount.

Calculate the margin

Use the formula: (Mid-market - Quoted) ÷ Mid-market × 100. Under 0.5% is excellent. 0.5-1.0% is fair. Over 1.5% means shop around.

Add the fee

Add any flat transfer fee to the margin cost. Total cost = (Amount × Margin%) + Fee. This is what the transfer really costs you.

Compare at least 2-3 providers

Repeat steps 2-4 with a specialist like Wise, a broker like Currencies Direct, and your bank. The cheapest total cost wins. Use our comparison tool to automate this.

Compare provider rates Read provider reviews

Frequently Asked Questions

What is the simplest formula for converting currencies?

To convert GBP to a foreign currency: multiply your GBP amount by the exchange rate. To convert foreign currency back to GBP: divide the foreign amount by the rate. For example, £1,000 at a GBP/EUR rate of 1.174 gives you €1,174.

Why is the rate my bank gives me different from Google?

Google shows the mid-market rate -- the midpoint between buy and sell prices on the forex market. Your bank adds a markup of 2.5-4% on top, plus a flat fee of £9-£25. A specialist provider adds only 0.3-0.8% with no fee. On a £10,000 transfer, that difference is £200-350.

How do I calculate the margin my provider is charging?

Find the mid-market rate on Google, then get your provider’s quoted rate. Formula: (Mid-market rate − Provider rate) ÷ Mid-market rate × 100 = Margin %. Under 0.5% is excellent, 0.5-1% is fair, over 1.5% means you should compare alternatives.

What is a cross rate and when do I need one?

A cross rate calculates the exchange rate between two currencies when only their rates against a common third currency (usually USD) are available. Formula: GBP/USD ÷ Target/USD = GBP/Target. You need cross rates for exotic pairs like GBP/THB or GBP/ZAR that aren’t directly quoted on all platforms.

When is the best time to make a transfer?

Tuesday to Thursday during the London-New York session overlap (1pm-4pm GMT) typically offers the tightest spreads. Avoid weekends -- Wise and Revolut add 0.5-1.5% surcharges when forex markets are closed. Friday afternoons also see wider spreads as traders close positions.

Which exchange rate should I use for my UK tax return?

Use HMRC’s official monthly exchange rates, published on gov.uk. Use the rate for the month the income was received or the transaction occurred. These are the only rates HMRC will accept for Self Assessment, VAT returns, and customs declarations.

How much can I save by using a specialist provider instead of my bank?

On a £10,000 GBP to EUR transfer, a typical UK bank charges £280-325 in margin plus a £20-25 fee. A specialist provider charges £40-50 total. That’s a saving of £230-280 on a single transfer. On £100,000, the saving is typically £2,500-3,000.

What is Dynamic Currency Conversion (DCC)?

DCC is when a merchant abroad offers to charge you in GBP instead of the local currency. It sounds convenient but uses a terrible exchange rate with a 3-8% markup. Always choose to pay in the local currency -- let your card issuer handle the conversion at a much lower rate.