British expat financial services clients will be hoping to take steps to address the income issues caused by the falling Pound.
This is because 2016 saw Sterling make meaningful rises against only two currencies: the Mozambique Metical and the Egyptian Pound.
In contrast, it fell steeply in value against other currencies usually considered much less robust. These included a 28.4% fall against the Brazilian Real, a 28% fall against the Russian Rouble and a 27.9% fall against the Icelandic Krona. Furthermore, the US dollar rose by 17.0% against Sterling, with the pound finishing 2016 lower against the Greenback than at any year since 1984. Similarly, it was down 13.3% against the Euro.
But it should come as little surprise when it is considered that Sterling’s value fell by around 20% during 2016, something which prompted many of those reliant on it for their spending power to seek the advice of expat financial services specialists. In fact, last year the Pound fell in value against 19 of the G20 currencies, with the Turkish lira (up 0.3%) proving the only exception.
It is easy to see why so many are keen to seek financial advice – as the Pound’s value falls, so the costs of the expatriate life abroad increase. Fortunately, there are things that can be done; for example, making a QROPS transfer can give pensioners the opportunity for a regular income that is not tied to the health of Sterling.
For those lucky enough to be deriving a regular income abroad though, there are many upsides to a weakening Pound. Not only do these parties not have to worry so much about the impact of Brexit, they are also in the privileged position of being able to take advantage of favourable exchange rates when visiting the UK or looking to invest in property or business in their country of origin.
It would be tempting to blame Brexit and Brexit alone for the Pound’s troubles. However, Lloyds Private Banking, say that this would be too simplistic. For example, in the six months leading up to the June referendum, the Pound fell in value against 54 out of 60 “benchmark” currencies. Since the referendum, the Pound has actually improved against five of these currencies and only fallen against a handful more. There are no easy explanations.