“Sterling looks fragile as the persistent Brexit negotiation stress and political instability weigh on the currency. The risk of a hard Brexit with no deal is constantly a source of weakness for the Pound and with the UK Parliament now in recess for the summer – volatility looks set to remain for the foreseeable future.” XE.Com *
What we know about currency volatility is that it decreases the ability to calculate budgets and forecast correctly…unless there is an FX strategy in place that protects against adverse movements.
For example; the past week has seen a GBP/USD range of 1.32642 to 1.29651. A UK business needing to purchase $100,000, faces an increased cost of up to £1,740 if they bought at lowest point versus the highest. And that is just looking at one week! With variances like this added to net costs over time, who ends up paying to support this – the customer or the business? And what is the long term impact of this?
With so much talk around the need for SME’s to plan effectively and put robust Brexit strategies in place, there is still very little airtime given to protecting their bottom line through effective FX risk management.
The unexpected outcome of the 2016 referendum and the subsequent and violent drop in Sterling, no doubt awakened any businesses that didn’t protect themselves against adverse FX movements as to the implications on their profits. However, many businesses still don’t have effective and robust FX strategies in place.
So if you:
- Send or receive international payments
- Haven’t factored in the potential for large swings (>10%) in the value of Sterling over the next year*.
- Buy currency on the spot and not forward
- Haven’t considered an FX strategy for your business
Then contact your local Haines Watts office who will arrange for a call with one of our FX partners to call you to give you more details.
*For more information on current market conditions, read this current market analysis.
**Average annual range (high-low) in GBP/USD for past ten years is 14.5
HiFX is working in partnership with Haines Watts. This communication is provided for corporate entities only. The details expressed in this transmission and accompanying documents are for information purposes only and are not intended as a solicitation for funds or a recommendation to trade. HiFX Europe Limited accepts no liability whatsoever for any loss or damages suffered through any act or omission taken as a result of reading or interpreting any of the above information. HiFX Europe Limited is authorised by the Financial Conduct Authority under the Payment Services Regulations 2017, registration 462444, for the provision of payment services. HiFX Europe Limited is also a registered MSB with HM Revenue & Customs. Registration number: 12131222. HiFX is a limited company registered in England and Wales. Registered number: 3517451. Registered office: Maxis 1, Western Road, Bracknell, Berkshire, RG12 1RT
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