Maximising currency transfers Post-Brexit
Since the 2016 Brexit referendum, the British pound (GBP) has experienced heightened volatility due to political uncertainty associated with a fully autonomous UK in addition to the coronavirus pandemic.
In the immediate aftermath of the referendum, the British pound (GBP) experienced sharp declines against several of its major trading partners, including the euro (EUR) and the US dollar (USD). The pound to euro exchange rate fell to lows of EUR 1.08, and the (GBP/USD) pairing plummeted to around USD 1.29. The unexpected vote also saw the British pound (GBP) drop to multi-year lows against the Australian dollar (AUD), New Zealand dollar (NZD) and Canadian dollar (CAD).
The UK’s historic and unanticipated decision to withdraw from the European Union (EU) on June 23rd 2016, triggered a collapse in pound Sterling’s (GBP) strength. Brexit turmoil soon sparked recession fears, and the UK’s political instability triggered significant shifts in UK assets, including stocks, commodities and currencies.
Despite the UK’s economic woes, the Office for National Statistics confirmed that UK GDP managed to rise 12.6 per cent in the third quarter of 2020. The rise was the largest quarterly expansion on record, suggesting a slow return to economic recovery.
The months during Brexit trade negotiations, however, saw the British pound (GBP) drift lower against its major trading partners as markets anticipated for a no-deal Brexit.
After almost four years of political and economic headwinds caused by Brexit chaos and fragile leadership, the UK left the EU on January 31st 2020 with a trade deal confirmed in December 2020.
Now, the question for many is what should we expect from the British pound (GBP) and currency transfers post-Brexit?
How will currency transfers be impacted post-Brexit?
The Brexit vote which saw the UK free from EU autonomy on December 31st 2020 has softened the British pound’s (GBP) exchange rate in foreign exchange markets.
Whether you engage in regular international money transfers, own an international trading business and need to export or import goods, or are an expat – you will find that the British pound (GBP) is no longer worth as much as it was before the 2016 referendum.
To put this in context, we’ve constructed a table with the pound’s main pairings to show the difference between the exchange rate today and the pre-Brexit value :
|GBP/EUR||EUR 1.31||EUR 1.15|
|GBP/USD||USD 1.45||USD 1.39|
|GBP/AUD||AUD 2.02||AUD 1.80|
|GBP/CAD||CAD 1.90||CAD 1.76|
If you are a private individual who invests in property abroad, a European house at EUR 250,000 would have cost you around GBP 190,839 pre-Brexit. Today that same property would cost you approximately GBP 216,456, which is a significant price increase.
To secure the best exchange rates, we advise monitoring the latest currency news so that you remain aware of market movement.
If you require further advice, speak to a currency specialist at Halo Financial. We are authorised and regulated by the Financial Conduct Authority (FCA) and can offer competitive rates while minimising the risk associated with currency transfers.
Securing a competitive exchange rate post-Brexit
Not only is the UK battling with Brexit headwinds, but the economic fallout caused by the coronavirus crisis threatens to push the UK into further economic distress. Should that be the case, the British pound may face fresh volatility in currency markets as the UK embarks on economic recovery in 2021.
Exchange rates are already prone to fluctuation, so securing a competitive rate in a post-Brexit-post-coronavirus world may appear daunting.
As currency experts, we can assure that we will maximise your international money transfers by providing you market insight and exchange rate trends that few banks can rival.
There are also risks associated with currency exchange that leading foreign exchange brokers such as Halo can navigate past.
To protect your international money transfer from these potential risks and limit any possible losses, this is a useful aspect of the process to consider.
Several contracts can be offered to minimise the risk associated with fluctuating exchange rates, such as:
Currencies are exchanged in a ‘buy now, pay now’ deal where your provider secures you the most competitive exchange rate available at that point and for immediate settlement.
Businesses and individuals can use this form on contract to buy and sell foreign currency at the current market exchange rate.
A forward exchange contract is a unique type of foreign currency contract, that is particularly useful if you’re concerned that an exchange rate may weaken or you need to budget for a future currency transfer.
Forward contracts allow the two parties involved in the exchange to agree on a fixed rate up to one year in advance of sending or receiving the currency. These contracts protect the buyer or receiver from fluctuations in currency prices during the fixed period.
A limit order enables you to buy and sell from your currency provider at a specified target rate, which an account manager will notify you about when available.
The key points to remember regarding maximising your international currency transfers post-Brexit is to follow the latest currency news, secure the most competitive rates and consider using specialist services to minimise exposure to risk.
If you’re still concerned, speak with an industry expert at Halo Financial and benefit from our specialist insight.