28th July 2015
The Pound hits a seven-year high against the Euro - but you're still getting short changed
July 28, 2015
As British schools break up for the summer, UK holidaymakers preparing to jet off to sunnier climates in Europe would have been delighted to see that they will be getting more for their money when they go abroad this year.
Increasing speculation that the Bank of England will raise interest rates in the not-too-distant future, coupled with recent events in Greece and the ongoing uncertainty in the Eurozone, saw the Pound reach a seven-and-a-half year high against the Euro in July.
It is estimated that Britons will receive around 10% more Euros for their Pounds this year compared to last. And it will not just be those going abroad that will benefit, with the strength of the Pound leading to cheaper imports landing on British shelves for consumers.
As you would expect, Midpoint has seen a rush of Pound to Euro trades in recent days as people seek to take advantage. However and perhaps more interestingly, we have also seen a run of Euro to Pound exchanges, suggesting that those on the mainland are expecting the Euro rate not to improve any time soon. Perhaps Greece's recent agreement with its creditors has not gone far enough to settle the currency market's nerves after all.
The Pound is also performing strongly against a host of other currencies, reaching highs that have not been seen for some years.
But is this news really all it is cracked up to be? This rally has been described as a 'windfall' for the UK but make sure you get the best currency exchange deal. The rates charged by retail banks and currency brokers to its customers to buy and sell money remains mysteriously disparate to the midpoint of the independent, inter-bank currency exchange rates. 'The true midpoint'. As traditional providers build opaque fees and charges into the rates they pass on to their customer, it means you would be getting even less for your money.
Furthermore, what about the impact on UK SMEs? The recent FedEx Great British Export Report found that 72% of UK SMEs believe that their international revenues will increase in the coming five years. A strong Pound is not good news for them and their currency risk is bigger still as a result of the exchange rates being used in the settlement of invoices. With SMEs at the very heart of the UK economy, it is even more important that they get a grip on the total cost to their businesses over an extended period of time.
At Midpoint, our peer-to-peer currency exchange and money transfer platform allows us to match you at the midpoint.
This provides a fair and transparent way for our customers to do business where everyone involved in the chain benefits. So why isn't more made of these hidden charges and hold banks and brokers to greater account? That is the 5.6 trillion dollar question my dear Watson.