News
Strong exchange rate
Sterling/US Dollar exchange rate almost at the $2.00 mark! The media love superlatives. The highest this and the strongest that will always grab attention
We have seen this recently with the Pound; at $1.9460 it reached its highest level against the Dollar for almost two years. What the papers mostly failed to point out was that if it had gone just an inch or two beyond that level, say to $1.9560, it would have reached its highest level for 14 years. Now that would be news but don't worry; it will probably happen.
We ought not to be too arrogant here about the strength of Sterling. Its performance against the Euro, for example, has not been exactly stellar. This is a weak Dollar that we are talking about, not a particularly strong Pound. But that doesn't matter to the thousands of shoppers who will cross the Atlantic to buy their Christmas presents this year. Nor will it matter to the Britons who are contemplating taking advantage of a buyers' market in US residential property.
If you have decided to take the plunge and move to the States you should also have begun the arrangements for transferring your money over there. With Sterling close to its highest level for well over a decade it would be a shame to miss the chance. Yes, the Pound could well rise further but imagine how chastening it would be if it did not and you had wasted this opportunity.
So organise a little protection, buy some Dollars forward. It is quite easily done. Put down a deposit, a percentage of the Sterling amount that you want to sell. Pick a date in the future when you will need your Dollars. Agree an exchange rate with your currency specialist. Sit back and wait. That is all there is to it. The beauty of the forward transaction is that you do not need all the money to hand at the outset, just the deposit. This is very helpful to the cash flow where, for example, the money will be coming from the sale of a UK property.
Bear in mind that the Dollar is expected to weaken further. There is no reason why we should not see $2.00 at some point in the months ahead, so don't go mad and sell all your Sterling at once. Just do enough to avoid having to kick yourself if the Dollar recovers and you have missed your chance.
Call Moneycorp today on +44 (0) 20 7589 3000 for expert guidance on the currency markets and protection from currency risk. Alternatively visit Moneycorp online and go to where you can open a free, no obligation Trading Agreement online.
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01 February 2007