The question of what will happen to the pound after Brexit is already affecting currency markets, which are experiencing volatility as the 31 December deadline approaches. Currency fluctuations dictate the amount of money you receive when sending money abroad and raise another question, namely how to secure the best exchange rate.
It’s a fact of business life that issues such as Brexit, the US election or the US-China trade war have global implications that affect trade and currency values at all levels – and there is little more that firms can do to change that than they can to shape the policies of the Bank of England.
But that doesn’t mean that you simply have to accept what’s available. While you can’t control the exchange rates, there are ways to ensure your money is working as hard as you do on your behalf.
You need to plan ahead as these can take time, but they are worth the effort:
- Speak with a currency specialist – they are often cheaper than the high-street banks and can explain some of the jargon, such as the difference between sell rates and buy rates
- Research exchange rate trends or ask your currency specialist to provide an overview of those trends so you can set your expectations with a realistic budget
- Take advantage of tools to track, target and even fix a prevailing exchange rate in advance with specialist currency tools. Below are explanations of three key tools.
Consider a currency forward contract
If you are thinking about buying a second home abroad, you’ve probably worked out the price based on the exchange rate at the time you viewed it. However, it could cost substantially more when you come to make the money transfer if the pound weakens after Brexit. Sterling slumped to a 31-year low against the dollar after the EU referendum result. Therefore, if the UK and the EU fail to agree a deal before the end of 2020, currency markets could become more volatile and the value of your payment, and property abroad, could alter.
Another example is that if you know you have to send money to the United States and want some certainty on the pound-to-dollar exchange rate, you could fix the prevailing exchange rate for up to two years using what is commonly known as a currency forward contract.* This can also be done with the euro, helping you get the best available pound-to-euro exchange rate. This way you won’t be caught out by any unpleasant surprises, although there is the risk that the rate may improve and you will be locked into a lower rate.
Consider a market order
If you don’t have a deadline for your international money transfer, you could also put in a market order. This allows you to target a desired rate and set up an automated payment conditional to that rate. You can set this up over the phone with one of the Telegraph International Money Transfers currency specialists. If the exchange rate hits this target rate, they will handle everything for you. As a result, you won’t miss out if the rate moves overnight, and you can get on with your day without having to worry about monitoring the market.
Transfer money with a currency specialist
If you are making an international transfer and wondering where you can get better exchange rates then a money transfer company can help.
It is one reason why the Telegraph has teamed up with moneycorp, to offer readers International Money Transfers. The Telegraph’s International Money Transfer service with moneycorp has no transfer fees, great exchange rates, and offers expert guidance on the currency market and the tools for managing currency fluctuations and international payments.
Telegraph International Money Transfer Service is provided by moneycorp which is the trading name of TTT Moneycorp Limited which is authorised by the Financial Conduct Authority under the Payment Service Regulations 2017 (reference number 308919) for the provision of payment services. TTT Moneycorp Limited (company number 738837) is registered in England. Its registered office is at Floor 5, Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ.
The above article was created for Telegraph Financial Solutions, a member of The Telegraph Media Group. For more information on Telegraph Financial Solutions click here
* Please note, a forward contract may require a deposit.
Information correct at date of publication.