After over two years of political impasse, the Brexit debate has well and truly heated up.
Temperatures began rising again in August when British Prime Minister Boris Johnson pledged that the UK will leave the European Union on October 31st “no matter what”, greatly increasing the changes of a no-deal Brexit. In such a scenario, the UK would completely break away from the EU without any agreements in place about trade, movement of peoples, and transportation of goods. In response to Johnson’s declaration, the pound (GBP) fell to its lowest level in two years.
The ensuing weeks have been nothing short of a political fiasco in the UK, so much so that staying abreast of the latest developments has become something of an Olympic sport. And while Brexit uncertainty remains as high as ever, the GBP continues to pay the price.
The AUD has been a key beneficiary of the GBP’s decline, with the AUD/GBP exchange rate recently reaching its highest point since December 2018.
But the effect of Brexit isn’t limited to just Brits. Here’s how Australians could be affected if the UK finally leaves the European Union.
For Aussies travelling to the UK
The Brexit saga has been mostly good news for Aussie travellers to the UK. A weaker GBP and a stronger Australian dollar mean that your travel money goes further than it did before the UK voted to leave the EU.
Things like accommodation, travel within Britain, and the cost of eating and drinking are all cheaper thanks to a stronger AUD/GBP exchange rate.
While a stronger Australian dollar certainly helps to make your UK holiday more affordable, there are even more ways to ensure you are maximising your money when converting from Australian dollars to British pounds. Check out these tips on how you can make your Australian dollars go even further when travelling overseas.
For UK expats living in Australia
For Brits who call Australia home, the decline in GBP has made it an opportune time to transfer money back to the UK.
Whether it’s to pay off a mortgage, support family or friends, or to manage an overseas business the strength of the AUD/GBP exchange rate means that your Aussie dollars will buy you more GBP than before.
If you are someone who regularly sends money to the UK, be sure to use an online money transfer specialist so you don’t overpay on transfer fees and exchange rate margins. As you may have seen in the news, Australian banks are among the most expensive and least efficient way to covert from AUD to GBP. Services like PayPal and Western Union are often worse.
For Aussie expats living in the UK
Unfortunately, the rise in the AUD/GBP exchange rate isn’t a win for all Aussies. If you are currently living and working in the UK, Brexit may have caused the value of your GBP earnings decline considerably. This includes any GBP-denominated savings you have accumulated, as well as the value of your UK pension.
GBP volatility has made it especially difficult for expats to manage any financial obligations in Australia, including mortgage payments, tax liabilities or supporting loved ones. And for those Aussies thinking about moving home, big moves in the exchange rate might make you unsure on how and when to convert your GBP to AUD.
Using a dedicated online money transfer service like FlashFX will help you maximise the amount of AUD you get for your GBP. From competitive exchange rates to zero transfer fees, FlashFX cut out the extra costs and delivers value where you need it – in your pocket.
Waiting for a particular AUD/GBP rate to send money home? FlashFX’s rate alert feature outsources the market watching to us. Simply tell us your desired rate and we will email you when it reaches that level.
Aussies with business interests in the UK
For Australian companies dealing with UK-based workers, customers or suppliers, the rise the exchange rate can help boost the bottom line by reducing the cost of GBP-denominated liabilities.
Until the Brexit issue is fully resolved, it’s impossible to say if the AUD/GBP exchange rate will remain at such favourable levels. Where possible, Australian businesses with interests in the UK could look to mitigate exchange rate risks by locking in forward contracts. Should the AUD/GBP rate fall, forward contracts would provide some financial security.
But there are other ways to save on overseas business payments, like choosing an optimal cross-border payments provider who doesn’t charge transaction costs. This is particularly true for Aussie companies making regular instalment payments to the UK. Increasing the frequency of overseas payments can have a meaningful impact on profitability, since you will be charged fees and an exchange rate margin with each transfer.