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Ammon News - AMMONNEWS - While it’s always worth having a basis understanding of the risks involved of transferring money— including an awareness of possible hidden costs and a general understanding of how exchange rates are calculated—it’s also worth knowing what’s going on in the wider world and how that could impact just how much cash you end up having in your pocket.

We’ve compiled a quick guide of global factors to watch if you want to send money abroad, at least over the next few months.

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Brexit

Obviously, Brexit developments are most likely to have an impact on the exchange rate between the pound sterling and other currencies.

But because of what Brexit might mean for the rest of Europe, developments also have the potential to send the euro higher or lower.

There are hugely divergent views on what a hard Brexit will mean for the currency and therefore for International money transfer.

Generally speaking, we’ve seen that sterling tends to sell off sharply when there’s any kind of uncertainty in markets.

That’s because investors who buy large amounts of currency tend to shy away from doing so when they’re less sure of its value in the future. And that in turn can have an impact on even the more retail-focused international money transfer market.

The pound has fallen well over 10 per cent against the dollar since June’s referendum and while some might think that this now makes it a bit of a bargain and a great time to change any dollars you might have back into sterling, there are some economist and strategists who say that the pound could fall further still.

One or two even think that it’s just a matter of time before it trades at 1:1 against the dollar. If you buy that, then you might want to think very carefully about the timing of your next international money transfer.

On top of that we also have a general election to worry about on 8 June. The outcome of that is likely to determine what the negotiating process ahead of Brexit is going to look like and will therefore also likely dictate the path of the pound.



Politics in Europe

This one will mainly have an impact on any money that you’re transferring into euros for, for property you might be buying overseas, for example.

Elections across several countries have the ability to lead people to call the future of the Eurozone— and therefore the sustainability of the currency— into question.

Again, uncertainty tends to weigh on the euro, so as soon as doubt is shed on the future of the currency bloc as a whole, that will likely be reflected in the exchange rate and the market for international money transfer.

And then there’s also Greece to worry about. During previous bailouts and times of turmoil, the euro has tumbled on fears that Greece might default or fall out of the Eurozone.

So be very aware: what happens in Brussels, Athens or Berlin might seem like it’s a distance development and only of concern to professional traders and investors, but it could very well matter a lot to you when sending money abroad.

Donald Trump

Finally, Donald Trump’s presidency in the US has already sent currency markets into a tailspin and while the dollar is perhaps the obvious currency to react to whatever the outspoken President says, it’s also worth keeping an eye on currencies like the Mexican peso if you’re thinking about getting some cash out for a holiday.

Mr Trump has promised massive investment in infrastructure and tax reforms that some economists said could lead to a sharp rise in the dollar. But more recently, markets seem to be having doubts that he has what it takes to actually act upon what he's been championing verbally.

The same rules apply here: as long as uncertainty remains, prepare for a bumpy ride when it comes to exchange rates and transferring money abroad, and perhaps spend a little bit of extra time on exchange rate comparison.

Generally speaking, currencies that tend to be treated as stable investments during times of market volatility include Japan’s yen and the Swiss franc.

*Independent