This article is part of the American Express UK Employee series, where internal American Express staff have put pen to paper and written about some of our products and services and how they can support UK businesses.
The only certain prospect these days is uncertainty, especially when it comes to predicting currency movements. Looking back, things seemed more straightforward - though I doubt anyone thought so at the time.
Cast your mind back 50 years, when monetary policy was the sovereign ruler, the undisputed head of state of the financial market realm.
Macroeconomic data such as retail sales, GDP and readings from the Purchasing Managers’ Index would provide an idea on the health of the economy, with growth forecasts, interest rate decisions and the speeches of MPC members adding perspective.
As data releases were known about weeks in advance, companies and traders had time to plan for trends and implement strategies to match currency purchase programmes.
Fast forward to 2019 and things are very different. The pinstripe suits, broadsheet newspapers, cigars and braces have gone. In their place have come chinos, loosely buttoned shirts and skinny oat milk lattes. Today we are surrounded by opinions, connected by technology and get news through devices that never leave our hands or pockets.
In today’s world, it’s very difficult for UK businesses that are exposed to foreign exchange to calculate where sterling will be in a few months’ time. Politics, more complicated than ever, have a big influence on financial markets, both in the UK and abroad.
The UK is living through a prime example of how politics can affect sterling’s volatility. Brexit has had a profound effect on sterling, so much so that the pound lost 13 cents against the dollar in just 12 hours - the biggest fall in 49 years. Since then, the pound has been so tied to the political agenda that monetary policy announcements have faded in prominence.
No one can give you the superpower to perfectly predict currency movements, but American Express has a century of experience in supporting businesses with their international payments. Perhaps it’s time for you to talk to us about yours.
Find out more about how American Express can support your business’s foreign exchange needs.
Written by Jordan Stubbs