It was a relatively positive day for the pound yesterday, bouncing back against the US dollar but treading water against the euro.
We’re still around 3% up on both USD and EUR compared to this time last year, but that’s unlikely to be much comfort if the pound (or whichever currency you’re selling) sinks at just the wrong time for your transaction.
You may have read that the behavioural economist and Nobel Prize winner Daniel Kahneman died last week. He specialised in what you might call irrational thinking (cognitive biases) and is particularly well known for his findings around loss aversion.
An example of loss aversion would be that if you were offered a bet, whereby if a coin toss was heads you would be given £110 but if tails you would lose £100, most would refuse the bet, even though economically it might make sense to take it. It just hits harder psychologically to lose.
It’s a viewpoint that we understand at Smart Currency, especially when buying an expensive item abroad with a long timescale. Yes, the exchange rate could move in your favour and the property or whatever else cost you less, which would be nice. But it could also move against you and cost a lot more. The Nobel Prize-winning view is that you’ll dislike losing a lot more than the joy you might get from a gain.
So, why not lock in that rate with a forward contract? No more worrying about losing out, just peace of mind that you can afford what you are committed to. Just give your account manager a call on 020 7898 0541.
