Brexit remains the main story for Sterling exchange rates at the moment, with much uncertainty over what will happen to the Pound in the next few weeks. The EU 27 have agreed the deal, and now we await to see if Theresa May can convince parliament to vote it through. We expect the vote to take place around the 12th December. Until then, the Pound is likely to remain subdued. If a deal is note voted through, nobody can predict how far the Pound could fall.
It’s a good time then, to refresh our readers on the tools that we offer that can protect you against rates moving the wrong way. Most people know that using a currency broker as opposed to your bank can save you thousands of Pounds simply by achieving better exchange rates. This is only part of the story however, as a specialist broker has various tools available that can help protect you against currency prices moving against you.
A good currency broker can help 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. Get in touch with one of our experts today to find out how we can help you with your currency exchange.
Protecting against adverse market movements
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. The rate varies throughout the day as we buy live from the market, and can be up to 5% better than your bank or existing broker may offer. This type of contract is typically used for property deposits, and subsequent transfers to top up your account or pay bills.
FORWARD CONTRACT– The forward contract allows you to set the rate for up to 2 years. When your property price has been agreed but the completion date is still a few weeks or months away, a forward contract guarantees the price as the formalities are concluded, 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.
Most clients choose to use both a spot and forward contract. This is beneficial as you can pay for your deposit and any fees using a spot contract, but you can also use a forward contract to secure the currency for your property further down the line. This combination of contracts provides peace of mind and the ability to budget accurately.
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 Chateaux in Bordeaux, you can instruct us 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 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.
To find out more about the services we offer and to see what exchange rate we can offer you, click here to make a free enquiry.