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FX Top Tips

26 May 2017


                                                12 Months since the Referendum


Over the past 12 months since the UK Referendum result, we have seen a huge fluctuation on Sterling verses both Dollar and Euro.  For exporters, this has enabled them to gain significantly, but for importers who have not put any hedging in place this has resulted in a cost increase for which most businesses have not built into their forecasts.  Below are the charts for the last 12 months, and the variance on cost of purchasing currency.

GBP/EUR – 12 months High €1.3174        12 month low $1.1067



Purchasing €500,000 at €1.3174 = £379,535 verses Purchasing €500,000 at €1.1037 = £453,021

That’s a Sterling difference of £73,486 or 16%


GBP/USD – 12 months High $1.4903        12 months low $1.2023


Purchasing $500,000 at $1.4903 = £335,502 verses Purchasing $500,000 at $1.2023 = £415,869

That’s a Sterling difference of £80,367 or 19%


What will the future bring?

We have learned from the last 12 months that the only thing that is certain in the Foreign Exchange markets is uncertainty.  We still have snap General Election in the UK, the European elections, the ongoing divorce proceedings for the UK from Europe, continued volatility from across the pond with regards to President Trumps plans, further potential FED interest rate hikes, and the slowing down of the Chinese economy. All these factors have a bearing on how the markets react. Attached below are the forecast charts for Sterling/Dollar and Sterling/Euro as per the panels of many global banks.


Forecast for GBP/USD

By the end of 2017 we have a 26 cent variant on the high and the low of where the banks see the greenback verses sterling. In real terms, that’s a potential difference of £84,110 if you were purchasing $500,000.




Forecast for GBP/EUR

By the end of 2017 we have a 35 cent variant on the high and the low of where the banks see the Sterling verses Euro In real terms, that’s a potential difference of £129,630 if you were purchasing €500,000.




The volatility over the 12 months, and the continued uncertainty ahead, outlines the importance as to why it is so important for companies to consider using hedging products to reduce the risk of currency fluctuations which can so easily wipe out profits within the business.  By locking currency in, this ensures businesses know not only the cost of the currency, but more importantly their profits in their deals.  Without using these products, you are taking a gamble, where you win or lose, throw the red or throw the black!  Is this a risk that is worth taking?


What is a Forward Contract?

A Forward Contract is an agreement to buy or sell currency, at the exchange rate available at the time of purchase or sale, for delivery in the future (up to 24 months). Forward Contracts are suitable for businesses looking to protect themselves from adverse exchange rate movements and also for businesses who wish to lock into a favourable rate of exchange, even if they don’t require the currency at that point of time.

A Forward Contract would enable you to cover forward with one rate of exchange. This would enable you to have one set price throughout the term agreed when you book your forward line. At any point and given time, you will be able to call off (draw down) your currency or sterling . There will be no restriction on the minimum you will be able to draw down. The obvious advantage of this contract is its simplicity and flexibility.

Booking a Forward Contract allows you to protect your risk of exposure from adverse movements during volatile times. Ultimately you will protect your cost levels and have the security of fixing a rate which enables you to budget without the concern of current exchange rates.


Exporting and need to invoice in a Foreign Currency?


Many businesses experience issues with their banks when trading internationally due to not being able to receive funds in a foreign currency.  We are able to provide 35 online tradeable currency accounts which enable you to be able to invoice in a foreign currency, receive those funds into the designated currency account and convert back into Sterling when the markets are in your favour.  The funds can also be locked in with a forward contract to remove the risk of any adverse currency movement, therefore guaranteeing that the Sterling you receive into your account is the Sterling amount you had budgeted for on your invoice.


FX Top Tips



Your business can take some proactive steps towards managing foreign exchange risk, whilst leaving the market analysis and interpretation to the experts...


Plan for risk


Planning is the first step to managing your FX risk, and agreeing on a budgeted exchange rate for the year will guide your transactions. An FX specialist can help to define this rate, enabling you to protect yourself from any potential adverse fluctuations.


Access your payments on the go


You need to ensure you can react quickly to changes in the markets, and manage your payments effectively in or out of the office. Your free-to-access Moneycorp Foreign Exchange account will allow you to trade online in multiple currencies 24 hours a day, as well as provide access to your own personal dealer.


Ensure you are getting the best rates


You want to be certain you are accessing the best rates in the most currencies, and also avoid any hidden payment charges along the way. Moneycorp Foreign Exchange leverage off the £22bn they trade annually to secure some of the most competitive rates in the market.


Take information from the most reliable sources


All Moneycorp Foreign Exchange Dealers are MSTA (Members of the Society of Technical Analysts) qualified. As experienced market traders they will use their expertise to ensure your company receives the best information and guidance on the markets, getting you the best solutions for your business needs.


For more information please contact Andy Medler on or 0121 237 1119.


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