Guest Blog from Clear Treasury – Brexit and the challenge of fluctuating currency markets

Guest-Blog-from-Clear-Treasury-Brexit-and-the-challenge-of-fluctuating-currency-marketsAfter 1,315 days since voting for Brexit in the referendum, the UK has left the European Union and entered an 11-month transition period to negotiate a new relationship. For now this means staying in the EU single market and customs union, continuing to pay into its budget and enjoying the freedom of movement of goods, people, services and capital.

But after this transition the future is far more uncertain, which inevitably means an extended period of fluctuation across currency markets. Sterling’s value against other currencies is never fixed, but seldom will it be under greater pressure than in the coming year and beyond as the UK finds its feet in a post-EU landscape.

If you’re a business trading across borders, mitigating the foreign exchange risks that come with this transition should be foremost in your plans. Swings in sterling’s value can have a huge impact on every aspect of international business, from the cost of paying for foreign services and goods to the true value of invoices paid in other currencies. The knock on effect for cash flow and company performance can be huge.

And it’s not just Brexit that has an impact – 2019 was a prime example of the impact other external factors can have on currency values, in particular geopolitical events and natural disasters.

EFM partner Clear Treasury focuses on protecting businesses from the unpredictable nature of currency markets no matter what the influencing factors are. Their currency specialists take a strategic approach to help provide stability in the face of change, helping companies better forecast incomings and outgoings over set periods of time by fixing future exchange rates in advance.

They do this primarily by creating forward contracts tailored to each business they work with, taking into account everything from existing budgets to future targets, often set yearly by many companies. With a forward contract, companies can set the value of sterling against the currency they’re exchanging for a specified future exchange date at a price agreed on now. With this unknown factor now a fixed certainty, companies can plan and forecast accurately to get a clearer understanding of future profit margins no matter what impact Brexit, geopolitics and Mother Nature has on the currency markets.

If your business is trading in international markets or has overseas interests, Clear Treasury can help you understand and use the right hedging products to manage your financial risk with expert foreign exchange execution and advisory services. Through their consultancy service they provide strategic and operational analysis on how to manage your financial risk and make the most of every cent, dollar or dirham your business earns overseas.

To find out more, head to the Clear Treasury website, send them an email or call their London office on +44 (0) 207 151 4870 or their Dublin office on +353 (0) 1567 6690.