For Aussies holidaying, working or doing business in the United Kingdom, it’s time to prepare yourselves for Brexit - whether that’s avoiding bad exchange rates for international money transfers (IMT) or picking up a travel card for your upcoming trip to Britain.
British Prime Minister Boris Johnson this week pledged that the UK will leave the European Union at the end of October “no matter what” - with or without a Brexit deal. And the looming prospect of a no deal Brexit has investors alarmed: on Tuesday, the Great British Pound (GBP) slumped to its lowest level in two years.
A no deal Brexit would mean the UK completely breaks away from the EU, with no agreements in place about how their future relationship will look. This would likely have a negative impact on trade and transport between the UK and the EU - one could expect more tariffs and slower transits, which in turn would hike up the prices of imported items.
While Brexit uncertainty is causing the pound to fluctuate in value at “the slightest bit of good or bad news,” IMT provider OFX noted in their Currency Review this year that “not all volatility is a bad thing”.
In fact, according to IMT provider SendFX’s Co-Founder, Ian Cragg, these events have helped to boost the Aussie dollar against the British pound.
“This week we have seen the AUD/GBP exchange rate reach its highest point since December 2018, with the rate sitting just under 0.57p,” Cragg said.
So what is Brexit’s effect on Aussies, and how should we be ready for it?
If you’re travelling to the UK...
For now, it’s good news for Aussie travellers looking to book a British holiday, said Cragg.
A drop in the value of the GBP and a stronger Aussie dollar against the British pound essentially means that in the short term, you’re getting more bang for your buck with your travel money. In other words, as an Aussie traveller in Britain, you could look forward to cheaper flights and accommodation and spending less overall on vacation expenses.
And if you’ve already got a trip planned, now might be a good time to lock in an exchange rate on a prepaid travel card, so you won’t have to worry about the Aussie dollar dropping while you’re away.
If you’re an Aussie expat in the UK…
For Aussies living and working in the UK, the volatility of the pound could make it a lot harder for you to manage your finances - especially if you’re planning to move back to Australia soon and want to convert their GBP to AUD.
As an Aussie expat, you may have set some of your funds aside in pounds, only to find they’re now worth significantly less than they were a week ago. If your pension or other assets are still in the UK, you could also be experiencing a sudden financial loss this week.
Although this blow to your savings can feel discouraging, Cragg recommended simply biding your time until Brexit talks once again retreat to the background.
“The possible best option in the short term could be to save your money in the UK and wait for these volatile times to settle down a little,” he said.
“Generally, when Brexit talks disappear from the media daily, the GBP has strengthened over time, swinging as high as $1.88 in recent months.”
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If you’re a UK expat in Australia…
British expats down under are bound to transfer money back home at some point during their stay, whether it’s to pay off a mortgage and other debts back in the UK or to send money to friends and family.
With the AUD/GBP exchange rate currently at a peak, it’s a great time to secure a deal with a foreign exchange provider, said Cragg.
“Looking to secure a rate longer term to take advantage of these positive moves can assist you to keep on top of things financially while the UK and EU parties broker their deal.”
After all, the higher the exchange rate, the more you’ll receive for your Aussie dollar. So if you’re sending money back home on a regular basis at the moment, choosing a specialist provider that offers competitive exchange rates could help you save hundreds, if not thousands, of dollars in the long run.
If you’re an Aussie business with interests in the UK…
The spike in exchange rates also presents a good opportunity for Aussie businesses dealing with customers, suppliers, clients or freelancers in the UK.
Cragg recommended using this time to secure better exchange rates, so your business can save on costs and also avoid some of the risks that come with importing or exporting in foreign currency.
“Mitigating risks by looking at forward contracts while rates sit at a 6-month high gives you some security and peace of mind on rates moving forward, allowing you to price accurately without constantly worrying about the fluctuations in the GBP,” he said.
“That way, no matter what happens to the pound, [businesses] will know what their costs and potential profits will be,” OFX added.
So although talks of a no deal Brexit have investors panicked, they could be a positive for many Aussies and UK expats in Australia. Hop onto good exchange rates today and check out our international money transfer comparison table to find a deal that suits you.