For now, at least, there’s light at the end of the tunnel for the pound
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Promoted ContentForeign Exchange (FX) update

For now, at least, there’s light at the end of the tunnel for the pound

Volatility is never good news for a currency. The foreign exchange (FX) markets like stability. And with three general elections in four years, the Brexit vote and a global pandemic, it’s safe to say it’s been a wild few years for the pound.

This was something we witnessed first-hand at my company, RationalFX, where my team and I spend our days helping our clients with international transfers. Saving them money on things like overseas purchases or international payrolls.

And for a while, out of the major currencies anyway, the pound was alone in the wilderness. Flailing and falling as leaders changed, negotiations dragged on and the country recorded one of the worst death rates in Europe.

So, for any of our clients dealing in GBP, it was all about risk management, damage limitation and taking advantage of tiny peaks when they appeared. When you’re dealing with large transfers, that work is still essential and saves clients thousands of pounds. But in contrast, we were encouraging our clients in Europe or the United States to take advantage of the gains their currencies were making against the pound.

The pandemic, however, has sucked other currencies into the chaos and recently the pound has been showing signs of life.

The pandemic, however, has sucked other currencies into the chaos and recently the pound has been showing signs of life. Don’t get me wrong, it’s still far from strong. Miles from the pre-referendum highs it was seeing vs the euro or the start of last decade, where you could go shopping stateside and it almost felt like you were getting two dollars for every pound.

But there is life. For now, at least. Investor attention – and this is the attention that drives the FX market – is focussed on which economies can recover from the pandemic. This means they aren’t focussing on Britain’s lack of trade deals or its under-reported troublesome talks with the EU. Instead, eyes are on the country’s impressive vaccine rollout and the reopening of the economy and recent hints from the Bank of England it could be the first central bank to adjust monetary policy and hike interest rates.

Does that mean it’s a good time to start transferring pounds? Well, things are looking up a little now, sure, but that can change in an instant. Especially in today’s climate.

People often assume FX is about taking advantage of good exchange rates there and then. GBP/EUR doing well? Buy euros. GBP/EUR doing badly? Hold off for now. Which, if you happen to need to send money overseas that very day or can afford to hold lots of money in a different currency, it can be.

But that’s rarely the case. So, it’s just as important to be proactive. There are contracts available, set up by companies like mine, that allow you to lock in strong rates for up to two years or even target future rates. You can even protect yourself from the lows. That means when the pound – or any currency you’re interested in – is on the rise or fall, you’re not left short-changed.

So yes, it could be a good time for GBP transfers. But if you look at things long term – and maybe get a little outside expertise – that time might come around a little more often.

For more information on how RationalFX can help you, contact International Partnership Manager Freya directly at 0207 220 8181 or Freya.Robinson@rationalfx.com and quote ‘Jewish News’ for a free first transfer.

Alternatively, click here for more information.

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