In my years of trading in financial markets, I have never witnessed as much volatility as we are seeing today. Markets move $0.02–0.03 multiple times throughout the day on political whispers and brief announcements on Twitter.
Over the past 48 hours, Sterling has strengthened against the Dollar by 2.5 per cent ($1.2695–1.3035) and 1.9 per cent against the Euro (€1.1186–1.1402) following news snippets that Theresa May and Brexit Secretary Dominic Raab have tentatively agreed on keeping access to European financial markets, as well as the highly controversial Irish “backstop” issue.
The negotiations, which followed the June 2016 EU referendum, have been a roller coaster ride, weighing heavily on the Pound. Immediately after the vote, Sterling lost almost 23 per cent or $0.29 against the greenback and 21 per cent or €0.23 against the single currency.
Since then, the UK currency has gradually clawed back some of the losses, having recovered 7 per cent or $0.10 against USD and almost 6 per cent or €0.07 against EUR. However, the Pound still has a long way to go before it reaches pre-Brexit levels.
How does it affect me?
If you are an importer, you might have been hit with increased trade costs, which have surged by more than 20 per cent, forcing you to either absorb it or pass onto your customers.
For example, if you bought $1 million over the past 48 hours, it would have cost you £787,711 on Wednesday, 31 October and £767,165 today, 2 November. This is a substantial difference of £20,546 to your bottom line.
Markets trade cyclically and within ranges. Targeting the top and avoiding the bottom of these ranges is the way to ride the volatility waves and purchase currency in a more efficient and smarter way.
Here are things you can do now to avoid market downturns and make informed financial decisions at opportune times:
Speak to our team of analysts and our dedicated dealers who are here to guide and assist you.