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What does Brexit mean for the British pound vs Australian dollar?

What does Brexit mean for the British pound vs Australian dollar?

Whether you’ve seen it on the news, read it in the newspapers or witnessed its dramatic effects on OFX’s live Market Rates page, the European Union (EU) referendum has taken centre stage in recent months. As we get closer to 23rd June 2016, many worry about the volatility of the British Pound, wondering ‘how will it affect me?’, and ‘what can I do about it?’

Ed Wiley, Alliance Manager at OFX shares his thoughts in this article.

What does Brexit mean for the British pound vs Australian dollar?

With so much European trade reliant on UK and European cooperation, the pound fell spectacularly against the Aussie dollar in the first 48 hours after the announcement. After four weeks, “AUD had jumped some 3.5 cents against GBP, and almost 6 cents since 1st January 2016,” says Matt Richardson, OFX Corporate Dealer. “The Bank of England’s expected interest rate hikes are looking less likely, risking a split in European economic relations that add more fuel to this financial fire of London.”   More recently, the data releases from the Federal Open Market Committee in the United States have reinforced investment in the Aussie dollar as a commodity currency. All this and more has deepened the pound’s 18-month decline against the Aussie dollar, which has seen a 15% depreciation since August 2015. Many believe that if the UK says goodbye to the EU, that this will only continue, but if there’s one thing that most agree on it’s that sterling will see even more volatility as we get ever closer to 23rd June 2016.

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What can I do about Brexit?

OFX can help manage your personal and business foreign exchange risk with a variety of transfer options.

Forward contracts

If the market rate is looking favourable right now and you anticipate a turn for the worse

  • Secure a rate for up to 12 months. Those who secured a forward contract before the Brexit announcement may still receive a higher exchange rate on the pound.
  • Spread the payment over 12 months or pay the entire amount on a future date.
  • With a lot of volatility predicted in the coming months, you may be protected against any further depreciation for the year ahead.

This period of exuberance for the Aussie dollar could be sustained for increased returns with a forward contract. If the market takes a turn for the worse you can enjoy the same favourable rate for up to 12 months.

Limit orders

If the market isn’t looking favourable right now but you anticipate an improvement within the next six months…

  • Tell us the rate you want to deal at and OFX will watch the market for you.
  • If and when it reaches your desired rate, OFX alert you so you can quickly take action.
  • There’s no predicting which way pound sterling will go but leaving OFX to watch the market on your behalf frees you from the fear of you missing your ideal rate.

OFX sends money to over 190 countries worldwide. That way you can keep track of the market without having to check in.

Regular payments

If you want to send/receive a set amount on a regular basis of your choosing…

  • You can set up a recurring payment up to a total of AU$150,000.
  • Think of it like an international automatic payment – simply set and forget.
  • You can rest assured that your funds will be delivered with speed, safety and efficiency, as often as you like.

Author : This is a guest post from Edward Wiley, Alliance Manager at OFX (formerly known as OzForex)

For more information on Brexit and its impact for Australian Expats, you can read this article here.

You can open an account online now for free with OFX.  All transfers from 20 April 2016 are now fee-free with OFX and you can book a currency trade 24 hours per day, 7 days per week.

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Disclaimer : This information is for educational purposes only and does not constitute financial or taxation advice. As this information is not advice and has been prepared without taking into account your objectives, financial situation or needs you should, before acting on this information, consider its appropriateness for your circumstances. Independent advice should be obtained from an Australian financial services licensee before making investment decisions, and a registered (tax) financial advisor/accountant in relation to taxation decisions. To the extent permitted by law, we exclude all liability for any loss or damage arising in any way.

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Craig

Craig is an Australian Expat and the founder of The Australian Expat Investor.Craig is passionate about investing, and while Craig cannot give personal financial or tax advice, Craig enjoys sharing investing, tax, and other tips for Australian expats to help them to build their wealth while living abroad and get the most out of their time living overseas.Get his free ebook on 9 Financial Surprises That Could Cost Australian Expats Thousands of Dollars at the link above.
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