Published Tuesday 10th March 2020

How did the major currencies perform in 2019?

2019 was a turbulent year for the currency market, with GBP/EUR in particular experiencing significant movement.

Brexit delays, political upheaval, slowing growth and geopolitical tensions all conspired to inspire GBP/EUR lows of €1.06 and highs of €1.20 – a discrepancy of 14 cents per pound. GBP/USD, meanwhile, recovered from lows of $1.20 to hit highs of $1.34, also a 14 cent difference.

And currency volatility wasn’t just confined to Europe – higher-risk currencies like the Australian and New Zealand dollars spent the year reacting to US-China trade tensions, while the US dollar fluctuated in response to Federal Reserve rate cuts vs. heightened demand for safe-haven assets.

While the pound surged to multi-year highs at the end of the year as UK PM Boris Johnson secured a commanding victory in the snap general election, its dizzy highs didn’t last.

Fluctuations in Focus

All the movement in exchange rates last year would have had a significant impact on international payments.

The 14 cent movement in GBP/EUR, for example, would have meant the difference of €14,000 on a £100,000 transfer to Europe – a significant blow to any budget.

What’s ahead for 2020?

Returning Brexit uncertainty and bets that the Bank of England (BoE) would cut interest rates both drove Sterling lower at the start of 2020 – and the currency is likely to experience notable swings as Brexit day approaches and the UK attempts to negotiates a trade deal with the EU.

While the US and China signed their phase one trade deal in mid January, higher-risk currencies failed to benefit as economists anticipate phase two could throw up a whole host of new issues.

The Australian dollar also suffered as the domestic bush fire crisis sparked concerns for Australia’s economic outlook. Meanwhile, over in the US investors will be keeping one eye on the Fed while looking ahead to the US Presidential Election.

With so much on the horizon over the next 12 months, significant currency movement is likely. All the potential volatility can make it difficult to protect your profit and pick the best time to make your international payments.

Protect your Payments

If you want to take control of your company’s FX exposure in 2020, leading currency providers offer a number of useful services:

About the Author: Harvinder Rattan, combines strong commercial acumen with a consistent ability to identify and deliver process and system efficiencies. His excellent technical and financial analysis skills serve him well at ERA, where he delivers step change improvements in control, accuracy, efficiency and levels of service across the procurement landscape for his clients.

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