Forecasts for the pound (GBP USD) varies from bank to bank and from month to month. This article takes a look at the general trend in GBP USD forecasts and how it might impact you.
The Forecast for the GBP in 2018
The Great British Pound (GBP or Pound Sterling) is slowly gaining, since hitting 31-year lows in October 2016, but it’s been a bumpy ride. However, a recent drop in the GBP USD rate has the market spooked. The uncertainty could mean further declines in the GBP near-term. For the rest of 2018, most bank analysts still predict the pound sterling to remain flat – basically unchanged from current levels of 1.3558.
Transferring Money Overseas
If you’re looking to transfer money overseas, it really depends on the destination you’re moving your money across to. Generally speaking, a weaker GBP means it will be more expensive to transfer money overseas.
Check out the forecasts below for the average exchange cross rates expected in 2018 for the top 3 money transfer destinations.
How to Find the Cheapest Way to Transfer Money Overseas
Compare The Total Cost
The total cost of the transfer comes down to 2 things:
1. Transfer Fees
Every Australian bank and money transfer company will charge you a different fee to send money overseas. Usually it’s between $10 and $32.
2. Exchange Rate Margin
There is no “standard” exchange rate. Each bank will offer you a different exchange rate based on the currency you want to send overseas and the amount you need to send.
How does a weak GBP affect me?
Expats and Pensioners
A weaker pound is disastrous for British people living abroad. Many who have moved overseas will see a dramatic fall in spending power. The the GBP could improve in 2018, but the outlook is uncertain.
For pensioners, many who have retired abroad will see a dramatic fall in the spending power of any UK state or private pension income with a weaker sterling.
A couple years ago £100 pounds would have gotten you $200 in Australia, one of the most popular retirement destinations for British expats. But now the same £100 pounds of income will only return $172 Australian dollars, almost 15% less.
If you’re in a hurry to sell your UK asset, such as a house or company, to support your lifestyle overseas, you might get more interest from foreign buyers with a weaker pound. While you’ll get more demand for your asset, you might not get the value you want from the sale.
It might not be a great time to be an expat, but you can manage and maximise your money transfers abroad by looking at different options. Check out our currency calculator for the best rates from different money transfer providers.
It’s not really a good time for Brits to go abroad, but if the pound does improve slightly in 2018 it might be ok to do some summer travel.
Holidays in Europe and elsewhere are currently still painfully expensive, which means the idea of a staycation holiday closer to home might be more tempting during the winter months.
Foreign tourists visiting the UK will benefit from a weak GBP. So UK tourist attractions and anything associated with the leisure industry, such as restaurants and hotels will do well. Working in these industries will certainly be beneficial.
What are the key influences on the GBP?
1. British (UK) Economy
The UK is growing – but really slowly. This means the pound sterling is unlikely to rise strongly. Many were predicting a drastic economic collapse after the UK left the European Union (known as Brexit), but this hasn’t happened. Needless to say, many are unclear on what will happen next – and this uncertainty is negative for the GBP.
British politics has a big influence on the Pound. When the UK left the European Union in 2016, many people questioned whether the UK would be better off, which created much uncertainty. Greater uncertainty from politics means investors will sell the GDP, because there is a greater chance of it getting weaker.
3. Other Currencies
The US dollar (USD) significantly influences the GBP. Generally, when the USD gets stronger, the GBP is relatively weaker and vice versa. Interestingly, the pound sterling is one of the relatively few currencies that is worth more than the US dollar (meaning that one pound buys more than one dollar).
General advice: The information on this site is of a general nature only. It does not take your specific needs or circumstances into consideration. You should look at your own personal situation and requirements before making any financial decisions.
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