Hedging EUR/GBP – Macro Outlook

Secure your cash flow

Operating internationally remains a key point in business life. Whether your business sources funding from foreign investors, operates in an office abroad, attends networking events for prospective markets in different continents or deals with international suppliers your financial management needs to adjust. Adjusting your finances also means backing your profitability by hedging your currency risk.

The Brexit vote has definitively revised the market forecasts. Surprise! Between June 2016 and October 2016 the British pound decreased by more than 15% against the Euro. The GBP/EUR is at current level of 0.86. The UK economy has welcomed the Brexit news with more confidence than forecasted. Last July the Bank of England decided to lower the interest rates to contain the inflation rate which has nevertheless doubled by few months, from 0.5% in June 2016 to 1.2% in November 2016. The UK growth rate maintains a reasonable level above 0.6% on a quarterly basis.

Hedging EUR / GBP

Despite a “soft Brexit” should be agreed, there are still a lot of uncertainty about both the unprecedented conditions of such an exit and potential referendums in Scotland and Northern Ireland.

EUR/GBP 0.90

For those reasons we expect the EUR to increase against the GBP for the next few months. We think that the level of 0.9 GBP/EUR will probably be reached in the short term again.

Trade your operations

Hedging your business from volatility simply means buying or selling the currency as of today or in the future if you need to secure a cash flow (client’s payment for instance). For your payments we highly recommend World First as a serious and cost effective platform to book your trades. We are frequent user and partner and totally satisfied.