Anyone who has picked up a newspaper in the last few months will be familiar with the term “Credit Crunch”.  

The term “Credit Crunch” has come about because of problems experienced in the US sub-prime mortgage sector where rising interest rates have lead to a situation where people can no longer afford to service or repay their debt.

As a result the US experienced record levels of loan defaults and home repossessions pushing the US economy into a recession.

How did the Federal Reserve react to this situation?

By aggressively cutting interest rates from 5.25% down to the current level of 2% in the space of just 7 months, it relieved the economic pressures felt by consumers; allowing the dollar as a currency to recover some of the looses seen in that period.

The tables have now turned as this problem first seen in the US has extended itself to the UK and Europe. Unlike our US counterparts, the Bank of England have been forced to take a more measured approach with interest rates as spiraling inflation, from fuel and food costs, grips the global economy.

What does this mean for people coming into the UK?

Well, the downward slide in the UK economy has weakened the pound against a basket of currencies by as much as 20% in the space of just 10 months.

For those of you coming into the UK, the further the pound weakens, the cheaper it is to buy. It is a great time to be buying sterling at present and there are no signs of an imminent recovery, so watch this space as the pounds losses could be your gains!  

We have come up with a few easy steps to make sure you get the best deal in this volatile market.

•    Stop and Limit orders – This is effectively where you use the time you have to play with to your advantage. By placing orders in the market you can target specific exchange rates above or below where the market is trading, allowing you to maximise your currency purchase.
•    Forward Contracts – This is a buy now pay later solution that enables you to reserve an exchange rate for a period of time into the future. Fixing the exchange rate in advance can protect you against any adverse market fluctuations.
•    Speak to a professional – It is no secret that currency brokers exist because we have the ability to undercut the high street banks on the exchange rates. A good broker based in the city, such as FC Exchange, will have their finger on the pulse ensuring that all clients are kept informed of current market conditions. This allows our clients to make a more informed decision about the timing of their currency purchase.

In conclusion, it is often said that the markets are like a big casino. Here at FC Exchange it is our role to help reduce clients’ exposure to risk, remember we are the experts and good service costs nothing!!

To find out more about the service offered by FC Exchange, contact James Smerdon or Daniel Wray by calling

44 (0) 207 989 000 

www.fcexchange.co.uk