Call us on 020 7183 2277
Download LATEST Market Rates >
Wild swings were predicted in both Sterling and polls when the Prime Minister stood up and gave us a polling date back in February. However, after the initial headlines and preemptive selling of Sterling, the polls have shown a strong support for the ‘IN’ camp, and on the back of this Sterling has bounced back over 7% from its April lows against the Euro. This is causing a lot of currency volatility.
That is, until yesterday (31st May), when a shock poll revealed strong support for an exit. This caught the market by surprise, as complacency had crept in over the last few weeks. Sterling reacted by falling 1.5% against the Euro and highlights the fluid nature of the final few weeks.
Hedge funds, renowned for playing the currency markets big, are fully aware of the profits to be had from the biggest government-induced swing in Sterling since George Soros became a household name in 1992. So important is their positioning in the Sterling markets, they have commissioned private exit polls on the day of the election, to give them an edge over the rest of the market. The cost of an exit poll? About £500,000 according to a source in the investment management industry, a number that is far lower than the potential profits to be made in the currency market.
Where does this leave small businesses who need to buy and sell currency? The increased volatility and the possible reduction in liquidity during the run-up to the vote can have drastic consequences to the cost of FX transactions for small businesses. Taking independent advice is always recommended to make sure rates are competitive, however, this is more important than ever now, as most Banks and Brokers are keen to exploit this once in a lifetime opportunity.
Vedanta Hedging is the largest FCA-authorised hedging advisor to SME’s in the UK. We are not a broker and don’t provide FX execution. This independence allows us to give truly unbiased advice in both FX and Interest Rate markets.
