Brexit and the pound: your currency questions answered

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By John Kinghorn, Currency Expert, FairFX

12 August 2019

While the Bank of England has held out the prospect of rate hikes if Brexit goes smoothly, money markets are betting it may have to cut borrowing costs instead. Currency expert John Kinghorn from FairFX discusses what Brexit means for finances.

All we can say for sure is that no one can know with any certainty what’s going to happen; this is uncharted territory. Nevertheless, what you can do is to take control of protecting your finances to ensure you manage your money as efficiently as possible.

Some individuals and businesses have been paralysed with the lingering indecision on what Brexit could mean for them. However, for the majority, commitments are still in place and they want to maximise their finances. We have had so many queries about Brexit, the ongoing negotiations and their impact on exchange rates, that we have set up a dedicated Brexit Support Desk.

Here are the answers to some of the most common questions we’ve tackled.

Can I protect myself against the impact of Brexit?

No one knows definitively where the rates are going. With so much uncertainty still surrounding Brexit, it’s very easy for the rates to move against you. You can reduce the uncertainty around exchange rates by locking-in rates as soon as the market reaches a level you’re satisfied with.

What would a ‘customs union’ deal mean for exchange rates?

One of the biggest sticking points in the UK’s effort to detach itself from the EU is a tariff-free ‘customs union’. Striking a customs union deal would be seen by many as a ‘softer’ form of Brexit, but it could be treated more favourably by the currency markets and result in less disruption for the pound than a so called ‘harder’ Brexit.

What will happen to the pound in a ‘no deal’?

If the UK crashes out of the EU with no deal, which new PM Boris Johnson has said he’s prepared to do come 31 October 2019,  it’s likely the pound will fall across the board. Already below 1.10 against the euro and sinking to a 28-month low against the US dollar, any more considerable hits the pound takes could see it drop to its lowest point in over a decade.

Below are some tips to get the most for your money, if you’re wondering how the currency markets might impact your international payments:

Track exchange rates: Monitoring currency movements is a full-time job (literally) and it’s hard to know when to buy at the optimum time. So let FairFX do it for you. Register for a free account at FairFX and you will have access to a dedicated Account Manager. They will discuss your overseas payment requirements and will work with you to maximise your payments.

Plan ahead and you can lock-in rates: Plan ahead if you know you will be making payments later in the year. Set up a forward contract, so you can fix today’s exchange rate to make transactions up to a year in the future. Don’t leave your payments to the last minute or you will be left with the exchange rate at that time. By planning ahead, you can take advantage of favourable movements.

FairFX helps businesses and individuals to save money when transferring money abroad. They have teamed up with ICAS to offer members special offers on their currency transfers.

Find out more

This blog is one of a series of articles from our commercial partners.
The views expressed are those of the author and not necessarily those of ICAS.


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