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How is sterling doing against the dollar and euro? OFX answers.
One aspects of international trading on online marketplaces that requires your attention is how international currencies are performing. The level of level of sterling against major currencies such as the euro and US dollar can have a significant impact on your profits and also influence decisions regarding stock buying from overseas suppliers.
One interesting aspect of the currency markets recently has not only related to sterling and the euro but how both are doing against the dollar. It’s interesting to note that the pound is particularly strong at the moment against the American currency. We wondered why that was and asked an expert.
Jake Trask, FX Research Director, OFX says of the situation: “It’s been a roller coaster ride for the pound over the past couple of weeks. GBP/USD which started the year trading around 1.35 rose to its highest level since the EU Referendum result became known getting above 1.43 late last week. The move higher was driven primarily by dollar weakness as concerns that the Trump tax plan will not provide the stimulus the economy needs to pay for itself and comments by US Treasury Secretary, Steven Mnuchin that he favoured a weaker greenback.
As well as sterling rising, the euro hit its highest level since Dec 2014 with EUR/USD rising through 1.25. Some of these gains have been reversed over recent days however, as the ongoing Brexit worries hit sterling. After a relatively quiet period re: Brexit news they have come back to the fore this week and GBP/USD has headed back down to 1.40 and GBP/EUR is down to 1.13 from a seven month high close to 1.15 seen last week.
As we near March’s crucial Brexit talks it’s likely we will see sterling wobble on concerns that UK is likely to lose unfettered access to the single market after a transition period is seen out. Importers of goods concerned about these talks would be well advised to consider forward buying foreign currency now to protect against more potential downside as we head towards Easter.”
If you want to know more about the currency services available to ecommerce business, Tamebay and OFX have compiled an ebook called Optimising Foreign Currency Exchange: the guide for marketplace sellers and online retailers that you can download for free.
I could be the grand old duke of york going up and down the hill following the ups and downs of each currency. My competitors have the same supplier price rises and falls so I’m focusing on what is actually within my power to influence or control.
Me hedging or speculating would be like buying a lottery ticket. That said, I still feel compelled to read the horoscope, sorry I mean research.