BUSINESSES NEED TO ACT NOW ON STRUGGLING STERLING AS ELECTION POLLS NARROW

With political and economic uncertainty continuing in light of the imminent UK general election, establishing a robust strategy to manage currency fluctuations is of utmost importance now more than ever. That is the claim of a foreign exchange (FX) expert, who suggests ignoring the impact of the election result on currency fluctuations could spell disaster for businesses with FX risk exposure.

Paul Langley
Paul Langley

Speculating on the election as the Conservative’s lead over the opposition Labour Party narrows, Paul Langley, managing director of Godi Financial – formerly OSTCFX – suggests a hung parliament could be the worst case scenario of the election result. This is because it would cause the most disruption and delay in getting negotiations underway and agreed for Brexit. Consequently, many businesses without a well-planned FX strategy could suffer from a weakened pound, causing potentially catastrophic damage to a company’s bottom line and profit margins.

When Teresa May initially announced the snap election the Pound rallied as high as 1.2000 against the Euro, as it was widely believed her Conservative Party could comfortably beat the Labour Party and its perceived weak leader. But Labour leader Jeremy Corbyn has changed many people’s perception of him and the party’s manifesto has definitely attracted plenty of support, most notably from those under 25. Meanwhile Sterling has fallen as low as 1.1427 against the Euro due to uncertainty associated with the election outcome.

Just a month ago, Jeremy Corbyn was considered highly unlikely to become the next Prime Minister. Corbyn’s ratings with the general public seemed to be at rock bottom and the Tories were ahead in the polls by up to 20 points. However, four weeks on and that gap has narrowed to 5-6 points, with some people now seriously considering Corbyn as the next leader of the UK.

As Brits get ready to cast their vote for their next Prime Minister this Thursday (8 June), Langley considers what the outcome could mean for Sterling and why businesses need to act now to safeguard against potential financial loss:

“Defeat for the Conservatives could put massive pressure on the British pound and show the UK as rudderless, with no real cohesive plan for Brexit. If Labour does not achieve a majority, which appears likely, we would be faced with a hung parliament. This would be a catastrophe for all concerned and could mean an appalling deal on Brexit, along with pain for the economy as high-net-worth individuals and companies flee Britain because of Labour’s tax plans.

“It is very hard to imagine any scenario in which the Pound doesn’t get hit hard in the FX space should the UK be faced without a majority government due to the uncertainty that would arise. We could easily see GBP/EUR back down around the levels we saw following the crash episode last October, at or around 1.1000-1.1100. This is a major concern for businesses dealing with currency risk.

godi logo“Ultimately markets and investors like certainty, and a hung parliament provides no such prospect of that. Business leaders therefore need to take control of their FX exposure now to help create more certainty for their organisations during these turbulent times,” said Langley.

Swansea-based Godi looks to educate its clients and form long-term, transparent relationships with companies where any margins or fees it earns are fully disclosed. It also offers a free audit to companies where it will assess historic FX transactions and demonstrate any savings that could have been made. This approach aligns to Godi’s values of doing things differently through education, transparency and expertise, to set a new standard of service for global financial engagements.

Contact

Seren Global Media

Christina Deias

Christina.deias@serenglobalmedia.com

About Godi

Godi Financial offer end-to-end international trade expertise and services encompassing FX risk management, currency exchange, finance and education. We’re a business set up to achieve one principal objective: to introduce greater certainty of outcome for businesses and individuals looking to trade internationally.

Originally established in 2012 as OSTCFX (being part of the OSTC Group), Godi is a brand that today has forged a reputation for unrivalled international trade expertise, outstanding service quality, and trusted, transparent market insights. As for the promise we make to all clients: we’ll help you plan, execute, and manage international transactions in the most cost-effective manner possible. We do this by offering a comprehensive range of services that help you manage risk, deliver against strategy, and respond in a timely fashion to market fluctuations. 

 As the first Wales-based FX company, it has saved its Welsh clients in excess of £750,000 versus their previous FX provider and processed more than £500 million of transactions.

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