Brexit and Money Transfers: What You Need To Know
A Brexit on the 23rd of June could have disastrous consequences for migrants sending money home and for anyone making international money transfers from the UK. Here’s what you need to know about the Brexit before making your next international money transfer.
BREAKING NEWS – 22nd of June 2016: Several money transfer operators like TransferWise, Azimo and others have already announced that they will be suspending their operations for Britain during the day of the Brexit vote. So whether or not you are considering to send money prior to the referendum, you should think about it now!
If you live in the United Kingdom, you’ve certainly heard about the upcoming “Brexit” referendum. On the 23rd of June, the British will vote on whether the UK should leave or remain in the European Union. Many opinion polls have shown that there is equal support on both sides, and tension is rising as the date of the vote draws near.
It’s certainly a big decision which could have an enormous impact on the country – and indeed on the rest of Europe – on many levels. Two recent reports by the Treasury, the department of the British government responsible for the country’s economic and finance policy, as well as Goldman Sachs, a global investment bank, warn that the value of the British pound could crash if the Brexit were to occur.
Why? Economists predict that a Brexit would harm the British economy both in the short and long term. Without EU membership, the country would trade less, do less business and receive less investment. This would cause the value of the pound to depreciate, along with its exchange rates. In fact, the reports estimate that the exchange rates between the pound and the world’s most important currencies could drop by up to 15% if the UK were to leave the EU.
Even though the British haven’t voted yet, the increasing possibility of a Brexit has already had a negative impact on the financial markets. In the past week alone, the UK stock market deteriorated by over 6%, while the exchange rate between the pound and the US dollar dropped by over 3%.
Exchange Rate USD per 1 GBP – Source XE.com
What does all of this mean for you?
Well, if you regularly send money abroad or need to make a one-off international money transfer from the UK, a decrease in the pound’s exchange rate against other currencies would mean less money arriving on the other side. Regardless of whether you are a migrant working hard to support your family in your home country, or whether you are a wealthy individual buying a house for your retirement, this could affect you.
For example, if you send £500 per month to your family in India, Nigeria or Poland, the Brexit could rob your family of up to ₹85,000 / ₦450,000 / zł5000 every year due to the drop in the exchange rate. If you are planning on buying your dream home abroad for the equivalent of £200,000, this could mean you would have to pay up to £30,000 extra for your property.
If you believe the latest polls which suggest that there is a good chance that the UK will leave the EU, it might be wise to consider making your next international money transfer before the exchange rate depreciates. Similarly, if you have savings in pounds as well as a foreign bank account in another currency, it could make sense to exchange your pounds into a foreign currency to protect them from negative movements in the pound’s exchange rate.
On the other hand, if the British people were to vote in favor of remaining in the European Union on the 23rd of June, this could have the opposite effect. The pound would probably appreciate, in which case you might prefer delaying your money transfer or keeping your savings in pounds.
Whatever you decide, make sure to always compare all the available options for sending money abroad on TawiPay. We update the exchange rates on our site multiple times per hour, so you can keep track of how the pound is evolving and who is offering the best exchange rate. Whatever the type of money transfer you are making, we will help you find the most appropriate service for your needs.