Lock into exchange rates as Sterling remains volatile, warns HiFX

Sterling fell against the majority of its major counterparts in September according HiFX's latest Global Currency Moves Report.

With Europe being UK's main trading partner, the focus was on the pound's fall against the Euro which took the GBP/EUR dangerously close to parity - a far cry from the rallies enjoyed over the summer. With the potential for a further fall in the value of the pound, Brits looking to protect their wealth should consider fixing their exchange rate so not to risk it sliding any further recommends currency specialists HiFX.

September was a turbulent month for Sterling fuelled by the suggestion of additional stimulus measures by the Bank of England. Mervyn King, testifying to the Treasury Select Committee, along with his MPC (Monetary Policy Committee) members, revealed that they were considering lowering the rates paid on commercial banks' reserves held with the Bank of England. The tone of the testimony added to the negative sentiment already surrounding sterling and the pound slumped to a 6 month low at €1.0750 by the end of the month.

In sharp contrast to Sterling suffering from negative sentiment, the Australian dollar was buoyed by the news that the Australian economy is holding up reasonably well despite ongoing concerns in the rest of the world. The influence of a weaker Pound, coupled with a very strong Australian Dollar, meant that GBP/AUD tumbled to a low of 1.8050 (last seen in 1985).

The only currency in the HiFX Currency Moves Table that Sterling didn't fall against in September was the US dollar. GBP/USD rates gave the misleading impression mid month that Sterling was holding up well in the face of potentially negative news for the UK economy. In fact, Sterling was actually fading fast against the Euro and its other major counterparts, owing its stability against the Dollar to the latter's continued weakness in response to global stock market and commodity gains.

Mark Bodega, Director at currency specialists HiFX comments: "Almost one in 10 of the British population lives or works overseas at any given time. Around 1 - 2 million Brits own property overseas and each year approx 300,000 Brits emigrate to a new life overseas. For these people, the unprecedented levels of volatility we've seen in the last two years and especially this month have made keeping a close eye on exchange rates and their effect on their wealth even more important. With many predicting further falls in the value of the pound, those Brits looking to protect their wealth should consider fixing the exchange rate before it slides any further.

"For people looking to buy abroad or in the process of buying, we'd recommend considering a forward contract. This is essentially allowing you to fix an exchange rate today for an agreed date in the future. You will be required to pay a 10% deposit now and the 90% balance upon the maturity of the contract but most importantly, it allows clients to lock into an exchange rate for up to 12 months.

"Anyone regularly sending or receiving money from abroad can protect themselves by using a regular payments service from a currency broker like HiFX. The service allows you to fix the exchange rate for up to 12 months so that you know exactly how much you'll be sending or receiving abroad each month.

"Those who are uneasy about fixing the exchange rate for up to 12 months and are more bullish about Sterling's future, should at the very least shop around for better exchange rates and compare the rates offered by their high street bank with a currency specialist, particularly one like HiFX which offers an online service for smaller amounts of money".