With currencies, the only thing we can predict is the unpredictable! But while we can’t forecast the future, we can make sure your money is protected wherever the exchange rate moves.
A forecast is a prediction or estimate of a future event or trend. Nothing is guaranteed. Back in 1987 Michael Fish made the most famous weather forecast of them all, when he told the nation there wasn’t a hurricane on the way. This left many people unprepared as one of the strongest storms on record swept across southern England. Economists were no better at predicting “Black Monday” which hit the stock exchange just days later.
More recently, who can forget the unsuccessful attempts to predict the outcome of elections on both sides of the pond? When it came to the Brexit vote, even Nigel Farage was predicting a Remain vote long after the polls closed.
So predictions, we believe, are a mug’s game. No one can foretell currency movements with any certainty; there is no crystal ball.
Don’t rely on currency forecasts
Even if homeowners had been warned of the hurricane, many would still have lost their roofs. When it comes to home buyers abroad, however, we can prevent your property buying dream from being blown away by changing exchange rates.
Your first line of defence is not relying on currency forecasts.
Your first line of defence is not relying on currency forecasts. If you do and the forecast you’re relying on ends up being wide of the mark it can seriously dent your budget. For Brits buying overseas, as the value of the pound decreases, the cost of your property will head in the opposite direction. Your budget could end up being significantly smaller than you first thought. Whatever the reason you are transferring money you can always be subject to unexpected market movements.
An example of an inaccurate economic forecast was the Bank of England’s (BoE) recent interest rate decision. The prospect of a rate increase was believed to be practically nailed on in April. Only for the central bank to leave them on hold in early May following a slowdown in economic growth. This caused the pound to dip against the euro and hit a four-month low against the US dollar.
BoE governor Mark Carney may regret stating prior to the May announcement that rate increases might be implemented “somewhat earlier and to a somewhat greater extent” than previously expected. This led Labour MP Pat McFadden to joke that Bank of England Governor Mark Carney was acting like an “unreliable boyfriend” in his guidance on interest rates. You can’t even rely on forecasts from the experts responsible for making the decisions that impact the economy.
At Smart Currency Exchange we offer a range of tools that can help you manage risk and protect your budget. For example, with a Forward Contract you pay a 10% deposit and fix the rate for up to a year. Therefore, if the value of the pound falls significantly between paying the deposit and completing, the price of your property will be protected.
However, please don’t let this worry you. Your trader is on hand to help you put a strategy in place for your transfers and minimise the risk, so give them a call on 0808 163 0102 between 8am and 6pm when you’re ready to talk about your plans.