Managing your international payments by Cathryn Evans
June has arrived, and the heat is on…not just in the Algarve, but for the ‘Brexit’ vote!
At Premier FX, we are receiving many inquiries from clients asking our thoughts on how the referendum is affecting rates before the vote and, of course, what it could mean for the pound after 23 June.
Certainly, the closer we get to the UK referendum, the more likely we will see even more movement in exchange rates. Every new “stay” or “leave” headline creates a new buzz and rate movement.
At the moment, opinion polls in the UK seem to suggest sentiment is 50/50. We have spoken to the UK Chamber of Commerce, who have conducted a national poll on Brexit with its members. The results are: 50% “stay”, 35% “leave” and 15% undecided.
The International Monetary Fund Director Christine Lagarde says she doesn’t believe there is anything positive to come from a Brexit, while the Bank of England Governor Mark Carney warns that the UK leaving the EU could trigger a recession. Those on the opposing side call these comments “scaremongering”.
So what will the results mean to you regards to the exchange rates? This is going to depend on if you are buying or selling GBP.
There appears to be consensus among currency experts that if the UK stay in the EU the rate for GBP/EUR will go up. We could get above 1.30. And, everyone seems to agree that if the vote is a “no”, the rate will go down, and we could be below 1.20.
Looking forward to 24 June, if the winning result is a “yes” and the GBP goes up, does it mean the pound will stay strong? Not necessarily. After the initial rise, markets could start selling off sterling, which will make it move downwards. And, if the “no’ vote prevails, after an initial downturn, the markets may take the opportunity to buy sterling; after which, we could see it get stronger.
Confusing? Somewhat. But we will watch the markets. Generally, they tend to take polls into consideration, and as we get closer the markets could have already factored in the vote, even though they are second guessing the outcome.
If you would like any further information on how we can help save you money on your transfers worldwide or find out more about our currency card service, feel free to call me or drop me an email.
Premier FX is authorised by the FCA (530712) and regulated by HMRC.
Tel: + 351 289 358 511