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Corporate strategy

Currencies.co.uk's Watson: Huge Impact from Brexit Vote Result

Jonathan Watson Foreign Currency Direct

Chief Analyst and Associate Director says it is still too early to have judged the Brexit vote as being either good or bad.

Brexit is a word that Associate Director at currencies.co.uk, Jonathan Watson, has been talking about for a while now.

As Chief Analyst it has been his job to forecast the impact that the UK leaving the EU could have not just on his company, but also his clients.

Currencies.co.uk are a specialist currency brokers which sees them help private clients and businesses buy currency at competitive rates.

They also offer clients practical support in the timing and planning of their exchanges.

72% of the company’s clients send money to the Eurozone in Euros, 12% US Dollars, 8% Australian Dollars, 4% New Zealand Dollars and 4% others.

The business is authorised by the Financial Conduct Authority and has the appropriate permissions allowing the firm to “passport” it’s services within Europe.

Watson says the company has seen a huge impact from the EU referendum result, noting their business is driven by currency fluctuations and the impact they have on anyone wishing to send money abroad or back to the UK.

“The movement on the rates has created headaches for some and opportunities for others. A falling pound is bad for clients buying currency but good for clients looking to buy the pound,” says Watson.

As Currencies.co.uk deal in currency the rates at which they buy foreign exchange for their clients have shifted dramatically since the Referendum.

“Compared to the pre-Brexit highs GBPEUR has fallen 13% and GBPUSD 15%. This means that prices have increased for anyone buying a foreign currency with sterling whilst prices have fallen at that same level for anyone bringing funds back to the UK,’ says Wartson.

While Currencies.co.uk don’t really import or export in the usual sense they have seen a big surge in clients bringing money back to the UK to take advantage of the spikes in the Pound.

“We have seen many businesses who do import feeling the pain and placing less orders. It is still too early to tell of any horror stories but following the 2008-9 sterling crisis when GBPEUR hit 1 for 1 many UK businesses had to significantly delay and cancel orders to buy overseas as the lower exchange rate made them uncompetitive,” says Watson.

Watson believes now historically a very good time to be buying the pound.

With regards to those looking to sell Sterling Watson reminds us that we have been here before:

“GBPEUR and most sterling rates (except GBPUSD) are at levels we last saw in 2013 so in terms of the prices on offer we and clients have dealt with these levels before.”

In terms of strategic responses to the referendum Currencies.co.uk say their business goals remain unchanged.

Response to the EU Referendum Result

Since Currencies.co.uk’s business relies on private clients buying property overseas Watson says the need certainty of the UK and EU relationship.

“Our business also relies on UK businesses buying products from overseas, a weak pound is not great for these clients. But these movements are good for clients buying the pound, there are always winners and losers on the currency markets,” says Watson.

Watson points out that the pound is effectively a yardstick for the health of the British economy so a weak pound whilst helpful for some exporters is not the best news for the economy as a whole.

“From a business perspective a Leave vote is perhaps not ideal but it will not stop businesses needing to buy products from abroad and clients wanting to buy property overseas. Indeed, we have seen a surge of clients making enquiries with agents we work with following the results,” says Watson.

On the question of whether any restriction to the freedom of movement of EU citizens would impact their employee base Watson believes there would be minimal impact as the company’s employees are UK based.

There were no immediate short term plans which have been altered by the vote.

“Our target market remains the same as it did before the vote, anyone moving money abroad or back to the UK. It is probably too early to call it bad or good, it is certainly nowhere near as bad as it the worst case scenarios predicted and will present interesting new opportunities for clients on the right side of the rate swings,” says Watson.

Advice for Theresa May and her Government

In Watson’s opinion there is a balancing act here and it is between getting a deal quickly and removing the uncertainty so that business and consumers can get on with life versus drawing out the negotiations to ensure the UK gets the best deal.

EU economies have literally just recovered from the worst financial crash in living memory, the last thing anyone needs is further weight on the back of the recovery.

“Whilst we wouldn’t want to rush into any agreement that was later found to be not in the UK’s best interest it is paramount to provide some certainty to business and consumers to give some clarity to the situation,” says Watson.