Most people have a view on what they’d like to happen with Brexit, but no one knows yet what will happen – and that includes those who work in the currency markets.
Everyone is facing uncertainty, and if you buy or sell your goods or services internationally, you will be concerned about how possible currency fluctuations could impact your business.
However, there are some steps you can take to protect your interests. One option is forward hedging. Having assessed your business model and forecast your costs in sterling, you can work through a foreign exchange broker or bank to lock the exchange rate ahead of the date when the transaction takes place. Forward hedge rates can be secured for up to two years. The advantage is that you will know exactly where you stand on your costs going forward. The downside is that, as rates can go up as well as down, you may lose out on a better rate.
Another option is a stop loss – an order placed with a broker to buy or sell currency when it reaches a certain price. This acts effectively as a safety barrier, taking away the stress factor for business owners whose profit margins could be severely dented by currency volatility.
If your focus needs to be on running your business, not on gambling with the financial markets, it is wise to deal with currency issues head-on. Your Kingston Smith adviser can help you further and connect you with the right specialists.