So how do foreign exchange rates work? Foreign exchange rates are grouped into currency pairs and traded on the foreign exchange market. For example, GBP/AUD is representative of the Pound to Australian Dollar exchange rate and denotes a transaction between the two currencies. In currency pairs the first currency shown (in this instance GBP) is known as the ‘base’ currency while the second currency (AUD) is known as the ‘quote’ currency. So if the exchange rate is GBP/AUD = 1.7938, it means you will receive $1.79 Australian Dollars for every one British Pound exchanged.
So how do you know the best time to make a trade? This is an important question, especially when dealing with larger sums of money or foreign property purchases. A range of global factors affect exchange rates, such as interest rates, economic forecasts and employment figures. Currency brokers are foreign exchange specialists and can offer transactions at an exchange rate of up to five per cent better than banks, meaning massive savings for clients. For example, when purchasing a property abroad at £200,000, using a currency broker could enable you to save thousands of Pounds. In addition, currency brokers are free to use, meaning customers can keep more of their money by avoiding the excess fees that banks can apply for their services. Additionally, when you’re engaged in a large foreign currency transfer, brokers can offer forward contracts which fix your exchange rate for up to two years in advance of a trade, so your funds will be safe from adverse fluctuations in the market. Currency brokers are experts at watching market changes and can help you decide on the best time to buy through communications via phone and email. As well as being excellent sources of free currency advice, brokers will do everything they can to help you make your transfer at the most lucrative time.