What does Brexit mean for expats?

Can expats who plan to make sterling money transfers either side of the Brexit referendum on 23 June afford to just sit and wait for the result to come in?

Wherever you live in the world, the vote could have a considerable impact on the exchange rate you get when sending money in and out of the UK.

The uncertainty has already driven down the value of the pound against major currencies such as the US dollar and euro, and the volatility is likely to increase as voting day nears.

A recent client survey by international money transfer experts XE found that 60 per cent of respondents who regularly make international money transfers believe their finances will suffer if Britain leaves the EU. However, 66 per cent of these aren’t doing anything differently with regard to their international money transfers, regardless of where they reside.

XE believe that there are options available to Brits living overseas and planning ahead could help your money travel a lot further, whatever the result.

Currency shock?

It’s impossible to predict what could happen, but in general markets tend to dislike uncertainty. If the UK decides to leave the EU, HSBC has predicted the shock could wipe up to 20 per cent off the value of the pound*.

But if the UK decides to maintain the status quo, it is reasonable to expect that the removal of this uncertainty might stabilise or improve rates. Using a professional international money transfer service could help you get the best rate for your money regardless of the outcome, while also smoothing out short-term currency volatility.

See how much you could save with XE: sign up and make a transfer

Exchange risk

A further fall in the pound would be unfavourable for expats who earn money in sterling and pay bills in another currency, for example, someone with UK pension income living overseas.

Many could suddenly find meeting everyday living expenses or regular commitments such as servicing a foreign currency mortgage more difficult than before.

Among the people XE asked that have changed their behaviour in preparation for the upcoming referendum, the most common change was that they are now actively watching the exchange rate. While this is an understandable reaction to the current uncertainty, it’s only helpful if you have a plan for how to react to the changes in rate.

One of the options available through a currency specialist is a forward contract, which allows you to lock in a good rate today but settle the bill later, easing some of the worry over potentially volatile rates. Or you could set up regular monthly payments for as long as 24 months, with a fixed exchange rate to protect you against currency swings whatever the Brexit result.

See how much you could save with XE: sign up and make a transfer

Sterling opportunity

On the other hand, sterling weakness could provide an opportunity for expats looking to transfer their overseas earnings to the UK, say, to buy a property or top up their retirement savings.

Again, a currency specialist like XE can help you take advantage with a one-off transfer, regular monthly payment plan or forward contract.

In the days after the referendum result is announced, sterling may be extremely volatile. If the UK remains in the EU it could rise sharply, so it could be a great time to send money overseas.

Whether you are buying or selling sterling, using a currency specialist may allow you to benefit from favourable exchange rate movements.

Beat the banks

Using an international money transfer service such as XE as an alternative to making an international transfer via your bank can be far more cost-effective. You may find that you can get a more competitive exchange rate and avoid hidden charges, which combined could save you hundreds of pounds on larger transfers.

You can also transfer your money quickly and securely, 24 hours a day, seven days a week.

(*source: Reuters http://uk.reuters.com/article/uk-britain-brexit-hsbc-idUKKCN0VX0QJ)