Smart Currency Business – July to September 2019 Currency Forecasts

The main aim of the Smart Currency Business quarterly currency forecasts is to highlight how important currency risk management can be to businesses with foreign currency exposure.

In our years of working in the foreign exchange industry, we have learned that despite what anybody might claim, nobody knows what is going to happen to any given currency pairing from one day to the next. The sad truth is that there is no magic crystal ball to consult; we are often asked what is going to happen to the US dollar six months from now and we hold our hands up – we don’t know and neither does anyone else.

In previous editions of our forecasts, we have been keen to stress just how unreliable they are. However, while that point always bears repeating, it is especially true for this quarter, given how much is up in the air with regards to the Brexit negotiations. Then there is the persistent unreliability of Donald Trump, where nobody can sure what he will do, say or Tweet from one day to the next. Forecasts make for interesting reading, but they can be very dangerous if you make a decision based on them that turns out to be wrong.

That is why we work hard to extol the virtues of our BRS (budget, risk, solution) approach. We believe it is the most effective means of determining each client’s requirements. If you’re budgeted at a specific level and the markets do not move in your favour, your business could be significantly affected. Not many UK SMEs can take those risks on the chin and, if you can, then good luck to you.

It’s fair to say that Brexit has been more tumultuous than we had ever imagined. Even the extension has only prolonged uncertainty – we still don’t know what, if anything, will end up being agreed by 31st October.

The lead up to a new Prime Minister and increasing likelihood of a no-deal Brexit has brought the pound to two-year lows, whilst the dollar and the euro are at the mercy of trade war tensions and possible interest rate cuts, amongst other factors. It’s impossible to predict the course of events from now until the 31st of October, so we can’t begin to make decisions based on how these currencies may fare.

Hence our passion for communicating this crucial point: FX should never be seen as a revenue stream, but, if the right strategic approach is taken, it is a means of achieving a definite cash flow.

We hope you enjoy reading it as much as we have enjoyed putting it together. Click here to download the report.