EU Referendum Set For 23rd June
In the last two weeks both GBP/EUR and GBP/USD rates moved over 3% each between the highs and lows. GBP/EUR rates peaked at 1.2990 before falling to a low of 1.265 after the tragic events in Belgium.
With the EU referendum now announced, and several major banks warning that the pound could be in for a 20% drop in value, Associate Director David Worthington provides some insight in to the types of contract offered to protect against adverse exchange rate movements.
One of the main reasons behind the continued weakening of sterling has been the uncertainty surrounding the UK’s up-coming Brexit referendum. Sterling crosses were shifting with no data to back up the movements, with investors unsure which currency to put their funds in. The pound has had a pretty torrid time recently and this uncertainty will not do anything to help. Even the strong retail data last week couldn’t do anything to bolster the pound with the markets just brushing the release aside to concentrate on the continued infighting within the Tory party.
The referendum is likely to be the dominating factor in the currency markets for the next few months. With the European Central Bank announcing an extension to its stimulus measures, adding to euro strength, the pound may well continue to struggle as the bookmakers still have the outcome too close to call.
Indeed several major banks have now warned that the pound could fall as much as 20% should the UK vote to leave the EU. This could make exchanging sterling for another currency an absolute minefield in the coming months, so it’s an opportune time to take stock of the types of contract we offer to protect against this eventuality. For a more detailed consultation on your particular currency requirements, contact your Foremost Currency Group broker today.
We can guide you through a range of contract options and find one that offers you a host of advantages depending on your situation. I’ve listed the main contracts available below:
SPOT CONTRACT – Exchange one currency for another, quickly and easily. Send us the funds within two days, and as soon as they clear we will forward the currency to the account you designate. Simple and straightforward. This is the most popular way to buy currency.
LIMIT ORDER - The limit order contract helps you get the rate you want. If you know what exchange rate you will need to buy that villa in Marbella, you can instruct your Foremost Currency Group broker to purchase the euros automatically as soon as the market achieves this rate. A great option if time is on your side and you can afford to wait until the market moves in your favour.
STOP LOSS ORDER – The stop loss order protects you against a drop in the exchange rate. It allows you to buy currency if the exchange rate drops to a pre-determined minimum level. Combine it with a limit order and you can hold out for a better rate while protecting yourself from a sudden fall in the market – perfect for budgeting and forecasting.
FORWARD CONTRACT– The forward contract allows you to set the rate for up to 2 years, and guarantees the price protecting you from any market volatility. Or if you feel that the exchange rate is at a high but you haven’t quite found the right property you can use the forward contract to hold that rate of exchange for up to 2 years with just a 10% deposit (payable within two working days) and then settle the balance before the contract expires.
Foremost Currency Group can act as your eyes and ears on the markets to help you find the opportune timing to make the most of your currency. If you would like to speak with one of our professional, knowledgeable currency specialists please get in touch for a free, no obligation consultation. Call +44 (0)1442 892079 today and ask for David Worthington and quote the reference TICR-CG.
