Personal Finance. Money. Investing.

Most financial advisors tell their customers the best thing they can do to grow their wealth after getting rid of debt and preparing for the future is to invest. Of course, there are various ways to grow your money through investing, and countless vehicles to use for your trading strategy. Finding the right solution for you can take some significant time and investigation.

For the majority of people, the most common areas to explore will be either share and stock trading, or forex trading. With shares and stocks, you pay for portions of a company, which you can trade or sell at a later stage. With forex, or FX, you’re making money by buying foreign currency and exchanging it from one currency to another. Let’s explore whether FX could be right for you.

What is Forex Trading?

FX or foreign exchange trading is one of the most actively traded environments in the world. Companies, banks, and individuals alike all carry out huge transactions on a regular basis. While much of the foreign exchange that happens every day is done for practical reasons, most currency conversion occurs as a result of forex trading. The amount of currency big investors choose to convert in a day can even lead to price movements for some currencies, making the market more volatile. Although FX might seem quite complicated, it’s much simpler than you’d think. The process starts with choosing a pair, or two types of currency that you can trade against each other, like EUR/USD.

Unlike other forms of investment, forex is usually quite fast-paced, as it requires users to act on slight changes in the value of a currency to make the biggest profits. You’re constantly working finding the most valuable lots for your portfolio. For beginners, it can be a little tricky to get started, which is why it’s so valuable to read guides that explains the considerations involved when investing in foreign currency in Australia when first getting started.

Is FX Trading Profitable?

For those looking to grow their wealth, the right forex trading strategy can be extremely beneficial. There are plenty of people out there who have made money by trading regularly in the foreign exchange market – but not everyone is suited to this task. If you’re looking for a more long-term solution where you can invest in something and leave your money to grow over time, this probably isn’t the environment for you.

Forex is all about speed and timing. You need to ensure you’re acting as quickly as possible when little changes happen in the market, or you could risk losing a lot of cash. However, if you have the time and skills to focus a decent amount of attention on this type of trading, it could be a powerful tool. As with most forms of wealth building, it will be up to you to determine how much risk you can take on as a trader, and whether the forex environment is a good place for you to begin exploring. There are always plenty of other options if you decide forex is too confusing.

According to Yoshiko Nagano of Cambridge University Press, the ancient civilisations took advantage of their country's natural resources, such as gold, quartz, jade, and wood, by trading these items for food, water, and other essentials with other countries. This method is what they call the Barter System, and this was carried out for years on end before the standardisation of coinage and paper bills.

The Bretton Woods Agreement established the Gold Exchange Standard at the end of World War II. As a result, countries fixed their national currency exchange rates to the US dollars convertible to gold at a fixed rate. Not only that, but it did now allow convertibility to be available to individuals and companies, only to central banks. However, when the US dollar convertibility to gold was terminated, the Bretton Woods System ended in 1971.

How does a paper hold any value if it has no support from anything? Well, that is where concepts like Legal Tender come in. The Fiat System, which we still use today, has an assigned value to a currency declared at a Legal Tender. It means the government decides if a medium of payment should be recognised for a financial transaction, trade settlement, or commerce in a country or jurisdiction. Some Fiat currencies, like the US dollars and the Euro, are internationally accepted. People use them for international trade because the world's most credible governments and largest economies support them. A Fiat currency has value because it is enforced by the government and because exchanging parties agree on its value.

Let's talk about digital currency, on the other hand. Based on the statistics of CoinMarketCap, Bitcoin is still the number one cryptocurrency in the world, with a market cap of $930,151,472,692 as of August 2021. Bitcoin is a digitally created asset held electronically, similar to a digital photograph or document, and does not deteriorate over time. The traders attentively guard the value of bitcoin on how it fluctuates from time to time. Cryptocurrencies vary in features and objectives, as subsets aim to solve some of the perceived challenges of Fiat currency and aspire to become a form of money to make payments or store value. 

Inspired by the revolution started by Bitcoin, many organisations formed their digital currency. Most of these currencies circulate intrusted crypto trading platforms, such as the Pattern Trader website. People worldwide have already been exchanging bitcoin for goods and services, speculating that bitcoin will have a determined value. Citizens, however, understand that Bitcoins can not replace government-issued currencies like the US dollar as they need to pay for their taxes and other government fees using the official currency. It is the upgraded way of buying and paying for things that we would like to have. Bitcoin has way more buying power compared to before. In 2010, Laszlo Hanyecz, a Florida resident, spent 10,000 BTC on two pizzas at Papa John's Pizza. The transaction was the first time someone used BTC for a business transaction with a real company. Nowadays, a bitcoin is worth 49,597.10 US dollars, so technically, it was the most expensive pizza ever sold. Another essential of this digital coin is that it is divisible and portable. You can send any quantity of bitcoin a lot quicker than shipping or sending cows or bars of gold to purchase something.

Most beginners opt to start investing with cryptocurrencies, learning methodologies and practising trading on crypto platforms; although, technical traders always remind the public that crypto trading is risky. Despite that, others take the challenge and see market volatility as an advantage. Nowadays, crypto enthusiasts are more courageous in investing since many mentors or coaches hold their hands along the way. 

More than 30 countries have imposed travel bans on the UK after a new strain of COVID-19 – which may be as much as 70% more infectious than the original strain – was detected in the country. Nations closing their borders include France, Germany, Italy, the Netherlands, Austria, Belgium and Israel.

Some of the travel bans imposed on the UK will last for 48 hours as leaders formulate plans to contain the spread of the mutant COVID-19 strain, while others are set to last until the end of January.

The news has caused immense disruption to accompanied UK freight, with the immediate future uncertain for the 10,000 lorries that pass through Dover each day. British supermarket group Sainsbury’s warned on Monday of fresh produce shortages if transport between the UK and Europe is not quickly restored.

The FTSE 100, London’s blue-chip index, fell as much as 2% on the open with British Airways owner International Airlines Group and Rolls-Royce down 16% and 9% respectively. As much as £33 billion was wiped out from the index’s shares.

Germany’s DAX fell 2.3%, France’s CAC 40 fell 2.4%, and the pan-European Stoxx 600 fell 1.8%, with travel and leisure stocks taking the brunt of the sell-off.

While the FTSE’s losses fell to 1.1% by the end of the first hour of trading, the impact on sterling was more extreme. The pound, which last week reached a two-year high, plunged as much as 2% to $1.3259 and 1.6% to €1.0864.


The impact on the pound was aggravated by continued uncertainty as to whether the UK will secure a Brexit deal ahead of the end-of-year deadline, after which existing trade stopgaps with the EU will no longer remain in effect.

The value of the pound sank precipitously on Friday, falling by more than 1% against the euro and the dollar after UK prime minister Boris Johnson’s warning on Thursday that a no-deal Brexit remained a “strong possibility”.

Sterling fell 1.3% against the euro to €1.089 and against the dollar to $1.3204 in early London trading.

The pound has been under continuous pressure since Wednesday, when Johnson and European Commission president Ursula von der Leyen confirmed that “significant differences” were yet to be bridged after trade negotiations in Brussels.

The UK and EU are currently deadlocked over questions of their post-Brexit relationship, with main sticking points including competition rules and fishing rights in UK waters. The two sides have set a deadline of Sunday to reach an agreement and prevent a “no-deal” scenario that would likely cause economic chaos.

"We need to be very, very clear there's now a strong possibility that we will have a solution that's much more like an Australian relationship with the EU, than a Canadian relationship with the EU," Johnson said. Unlike Canada, Australia does not have a comprehensive trade deal with the EU, and most of its trade is subject to tariffs.

However, the UK as a nation conducts far more trade with the EU – around 47% of its overall trade compared with Australia’s 15%.

“With the UK now looking like it’s hurtling towards a no-deal Brexit, investors should adopt the brace position for swings in sterling and shares in domestic focused companies,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.


Whether or not a deal is achieved, the UK’s temporary trade arrangements with the EU will expire on 31 December.

Giles Coghlan, Chief Currency Analyst at HYCM, provides Finance Monthly with his insight into how the balance of markets and currencies may shift as December looms.

Brexit negotiations recently risked falling off the cliff edge as political posturing reached new heights. In the lead-up to the EU Leaders Summit on 15 October, Prime Minister Boris Johnson said the UK would stop negotiations outright if no credible progress was being made. Of course, in such a scenario, this would then open the door to a no-deal Brexit potentially unfolding.

The British pound has certainly been bearing the brunt of these Brexit worries throughout 2020, with sterling often falling to prices not consistently seen since the 1980s.

However, contrary to the forecasts of some commentators, talks have now advanced, and to put it in the words of EU officials: “intensified”. Those who believed a deal could be struck often reflected on how the initial withdrawal agreement was only agreed to mere weeks before the end of 2019, and it seems the UK government seeks to replicate such last-minute compromises as the final Brexit hurdle approaches.

So, after much grandstanding and posturing, daily talks have begun in an attempt to solidify a deal within three weeks, allowing the minimum amount of time needed to implement a post-Brexit trading relationship before 31 December.

Investors and traders must remain vigilant and aware of all the possibilities on the horizon. That’s why now is an ideal time to consider these possibilities and the impact they could have on the pound and financial markets more generally.

Investors and traders must remain vigilant and aware of all the possibilities on the horizon.

A clean break?

At the moment, it is still possible for a deal to be agreed upon by London and Brussels. Looking beyond the political rhetoric and grandstanding on display from both sides of the channel, a no-deal Brexit is not an ideal outcome for either parties. Of all the reasons, the sheer uncertainty and potential disruption that could be caused are of top concern.

So, if an agreement is made, this is expected to have an immediate impact on the value of the pound. We could see the pound instantly jump to $1.35 against the dollar, especially if the UK retains the same level of Single Market access as enjoyed previously. With goods still able to freely move between the UK and its European neighbours, a fruitful deal would dispel the long-standing uncertainty that has overshadowed UK economic forecasts since 2016. Sterling would undoubtedly benefit massively from the lifting of this worry from the minds of investors.

However, a final breakdown of negotiations and a no-deal Brexit is still something to be considered seriously. This outcome would likely incur an immediate devaluation of the pound to approximately $1.20, with the potential to fall further as the logistical issues of the UK’s new import/export reality are fully realised.

The third outcome, an extension of the withdrawal period and the continuation of negotiations, would likely provide a small boost to sterling’s value but not change the weekly volatility we’ve seen from the pound throughout 2020. Admittedly, such an outcome would require a re-ratification of the withdrawal agreement and signing off from all 27 EU state leaders who, given the ongoing COVID-19 crisis, may not be inclined to allow Brexit to distract from other pressing concerns for another year.

Regardless of if a deal is agreed upon or not, however, there will be other factors that could potentially affect sterling’s value in the foreign exchange markets. From geopolitics to COVID-19, I believe it is vital for investors to stay abreast of other unfolding trends that are affecting currency values in 2020.

We could see the pound instantly jump to $1.35 against the dollar, especially if the UK retains the same level of Single Market access as enjoyed previously.

Global factors

The recent jump in the pound’s value as a result of Brexit talks resuming in earnest was accompanied by a drop in the dollar’s value. This was seen as a consequence of stalling US Congressional talks regarding a COVID-19 relief package. Potentially more impactful for the dollar, though, is the upcoming US presidential election. Regardless of which candidate wins, a contested election – in which a candidate questions the validity of the results – could see the dollar’s value rapidly rise in risk off flows. The USD has been acting as a safe haven currency during the COVID-19 crisis and any potential of a Trump win would be seen as USD positive as US protectionist policies would look set to continue. However, the medium-term pressure on the USD favours a selling bias on record QE levels with interest rates set to remain low until 2023, according to the Federal Reserve’s latest minutes. If a Brexit deal is secured around the same time, some further GBP/USD upside could be encouraged by outflows from the USD.

Looking to the Bank of England (BoE), another potential change in sterling’s value could come as a result of negative interest rates. BoE governor Andrew Bailey has repeatedly confirmed such a policy is ‘in the BoE’s toolbox’ since August, demonstrating that this could help spur the country’s post-pandemic economic recovery. Thankfully for those unconvinced by this controversial policy, BoE deputy governor Dave Ramsden this week reassured investors that it was still not yet the ‘right time’ for such measures to be introduced.

Investors on alert

In summary, there are multiple ways the value of the sterling could be affected by geopolitical events this year. Volatility remains rife across global currency markets, and there is no indication of this volatility disappearing anytime soon.

This is especially relevant for investors, as research commissioned by HYCM earlier this year demonstrated that cash savings have become the premier asset class for those concerned about market uncertainty. Of the 900 investors surveyed, a massive 78% held cash savings, as opposed to the 48% with stocks and shares and 38% with property.


So, for such investors with liquid-asset-heavy portfolios, keeping informed regarding the UK’s geopolitical situation is paramount for avoiding a sudden portfolio devaluation. Or, conversely, one should consider alternate safe-haven assets that also allow for hedging against uncertainty, such as gold, silver, copper or cryptocurrency, without the risk of long-term devaluation through basic monetary inflation.

Regardless of one’s specific strategy, investors and traders would do well to ensure they keep a level, informed head when approaching financial decisions in 2020. Despite any future potential uncertainty, I firmly believe there are still great investment opportunities to be found as the UK begins its transition outside of the EU. The challenge is finding them.

High Risk Investment Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. For more information please refer to HYCM’s Risk Disclosure.

PayPal announced yesterday that it will enable its customers to buy and sell Bitcoin and other cryptocurrencies through their PayPal accounts, which could then be used to buy products from the 26 million sellers that use its service.

The payments platform’s announcement brought a surge in Bitcoin prices, rising as much as 4% to $12,381 on Wednesday – its highest level seen since July 2019. With this latest jump, Bitcoin gains rose above 75% for the year.

Mike Novogratz, founder, CEO and chair of Galaxy Investment Partners, described the announcement as “the biggest news of the year in crypto.”

“All banks will now be on a race to service crypto,” he wrote in a tweet. “We have crossed the rubicon people. Exciting day.”

Though it has existed as a form of payment for more than a decade, Bitcoin and its fellow virtual currencies have struggled to see widespread use. Though cryptocurrencies’ volatility has made them attractive to speculators, it poses risks for shoppers and sellers. Transactions are also generally slower and costlier than more mainstream payment modes.

However, PayPal has expressed confidence that its new system will be able to address these issues, as payments will be settled using more the dollar and other traditional currencies. As a result, it will manage the risk of price fluctuations while merchants receive payments in virtual coins.


"We are going about it in a fundamentally different way to make sure we provide the maximum amount of safety to our merchants," PayPal CEO Dan Schulman said in an interview, adding that the platform is already in discussion with central banks regarding the use of Bitcoin in transactions.

PayPal will issue new buying options in the US in the coming weeks, with a full rollout to come in early 2021. In addition to Bitcoin, it also plans to add Bitcoin Cash, Ethereum and Litecoin to its roster of supported cryptocurrencies. The company confirmed that customers will be able to store these currencies “directly within the PayPal digital wallet”.

The value of the pound dropped on Thursday as COVID-19 lockdown measures were reimposed across the UK and a key deadline arrived in Brexit talks.

The pound fell against the dollar and euro around noon on Thursday. Pound sterling fell 0.4% against the euro and 0.7% against the dollar, reaching €1.1025 and £1.2921 respectively.

The currency’s decline followed after UK health secretary Matt Hancock confirmed that restrictions would be increased in multiple regions of the UK from Saturday onwards. Most notable was the announcement that London would be upgraded to “Tier 2” restriction status in order to curb the continued spread of COVID-19, a move that is likely to impact major businesses in the area.

Under Tier 2 restrictions, separate households are banned from mixing indoors. Though pubs and restaurants will be permitted to remain open, the increased restrictions will likely have a significant impact on demand; Altus Group’s head of UK property tax, speculated that the measures “could be the death knell” for the more than 10,000 bars, pubs and restaurants in London.

The pound also suffered from investor attention turning towards Brexit negotiations. Last month, UK prime minister set 15 October as a deadline to reach a trade deal with the EU, pledging to walk away from the negotiations if an agreement could not be reached beforehand.


However, some investors remain confident that the passing of the deadline will not spell the end for a potential deal. “In our view, neither the UK prime minister’s 15 October deadline nor the European Commission’s 31 October deadline constitutes a hard stop on Brexit negotiations,” wrote Goldman Sachs economist Adrian Paul in a letter to clients on Thursday.

Though the pound gained around 1% against the dollar and euro on Wednesday, its gains were later reversed as French president Emmanuel Macron took a hard stance on EU fishing states retaining access to the UK’s waters.

The Sterling pound fell against the US dollar on Wednesday as the UK anticipates a “second wave” of coronavirus cases and the possibility of new lockdown measures dampening economic growth.

The pound fell by as much as 0.4% to $1.26 in early trading and remains unsteady. The new ratio represents a two-month low for the currency.

The latest slide followed comments from Dominic Raab during a Sky News interview, in which he said that the UK government could not rule out a nationwide lockdown, but stressed that it would “take every effort to avoid that.”

Raab’s remarks came twelve hours after Prime Minister Boris Johnson announced new rules intended to curb the rise in COVID-19 cases across England. These include a 10pm curfew for pubs, bars and restaurants, a reduction in wedding guest capacity from 30 to 15, a freeze on sports fans returning to watch games live and a fine of up to £10,000 for those who repeatedly breach lockdown rules. For first offenders, the fine will be £200.

Kenenth Boux, strategist at Societe Generale SA in London, commented that both remarks did not “inspire confidence in UK services or the economic outlook.”


Despite the fall in value of the pound, the FTSE 100 reacted surprisingly well to the announcement of new restrictions, rising 1.2% during Wednesday trading. A strong dollar benefits the index’s listed companies, as they mostly report their profits in dollars.

The FTSE 250 also opened higher, rising by around 1.1%.

The value of the pound fell against the dollar and euro over the weekend, as news emerged that UK ministers were planning new legislation to undercut key provisions of the EU withdrawal agreement, giving rise to fears that the UK will face an end-of-year “no deal” Brexit.

The Financial Times first reported that the “Internal Market Bill” would undermine the legal force of areas of the agreement in areas including customs in Northern Ireland and state aid for businesses, risking a potential collapse of trade talks with the EU. Downing Street later described the measures as a standby plan in case talks fall through.

Political backlash followed as Michelle O’Neill, Northern Ireland’s Deputy First Minister, described any threat of backtracking on the Northern Ireland Protocol as a "treacherous betrayal which would inflict irreversible harm on the all-Ireland economy and the Good Friday Agreement". Scottish First Minister Nicola Sturgeon also stated that the legislation would “significantly increase” odds of a no-deal Brexit.

The pound was down 0.6% against the dollar by 10am on Monday for a total slide of 1% against the dollar in the past 5 days. The pound also slid 0.5% against the euro for a total of 0.7% in the same period.

The value of the pound is now equivalent to $1.319, or €1.1145.


The eighth round of Brexit talks is set to begin on Tuesday, aimed at forming a deal that will allow companies in the UK and EU to trade without being hindered by customs checks or taxes.

The news follows Prime Minister Boris Johnson’s imposition of a 15 October deadline for securing a Brexit deal, recommending that both sides “move on” if no such agreement is reached by that date. The proposed deadline would come far ahead of the slated end of the transition period on 31 December 2020.

For many years now, an increasing percentage of consumers have transitioned to using debit cards rather than cash. Many projections state that of all global currency, only 8% of it is physical currency, which shows just how prevalent and important the likes of credit and debit cards are to global economies. 

Credit and debit card use is much more widespread than before, with users citing added convenience and time saving as major reasons, yet in 2020, COVID-19 has provided another reason for both customers and businesses to embrace cashless trading. By walking into essentially any store on the high street, you will likely find signs banning every transaction other than contactless payments, which shows that COVID-19 is accelerating society towards this cashless revolution. 

Since the pandemic, many stores have opted for a cashless policy, whilst cash machine withdrawals have fallen by 55%. Due to the uncertainty surrounding COVID-19 and a potential second wave, this trend looks set to continue. Below, Southern Finance's Tom Simpkins explores the pros and cons of a business going cashless during the COVID-19 crisis, as well as what advantages going cashless may have for everyone after COVID-19.

Saving Time and Money

Just as many adhered to the paperless revolution a decade ago, deciding to go completely cashless removes the need for expensive equipment that would have once been considered essential. Shops would have little to no need for tills, nor would the likes of safes be standard when all transactions would be handled electronically.

Deciding to go cashless may save time, money and effort in the long run, especially as it looks like it may be becoming the new standard. After all, the beginning of the UK’s lockdown in March saw the use of physical currency in stores drop by approximately 50%, and with lockdown measures fluctuating, the rest of the country is seeing little reason to return to relying on physical cash.

Deciding to go cashless may save time, money and effort in the long run, especially as it looks like it may be becoming the new standard.

‘Staying ahead of the curve’ is always a wise move, especially if you’re trying to get a one-up over your competition. By embracing the new standard in an ever-growing cashless society, you can adjust to the new challenges that it brings, such as a focus on convenient technology. An example of this would be to invest in contactless payment points, digital tablets, and other equipment that can make life easier for customers and workers in almost any industry, ranging from the restaurant industry to retail.

Increasing Business Efficiency

Cashless transactions aren’t just efficient due to saving time counting out physical currency, it also promotes smoother transactions for businesses in general. By primarily dealing with cashless transactions, businesses will have less stress handling physical currency, such as handling bank deposits or concern over germs. Proof of this latter point was seen in China during the early lockdown efforts, as thousands of banknotes were destroyed from fear of being contaminated.

Certain businesses and industries such as those that specialise in transportation have already seen a boost in efficiency, so much so that it feels like there’s no going back from cashless for them. A prime example of this would be buses, as before COVID-19 there were various pushes to encourage using contactless card payments as opposed to paying in cash, yet now that necessity demands contactless payments this push has become much more important.

As to be expected, cashless transactions are also much more convenient for customers, thanks in no small part to the abundance of digital wallets available. Along with credit and debit cards, most smartphones are capable of being connected to bank accounts and serving as digital cards; the likes of Apple Pay and Google Pay are already immensely popular. By being able to make a payment by placing a phone against a card reader, customers can make everyday transactions quicker than conventional methods, like fishing out a credit card.


Vulnerabilities with Banking Issues

Of course, no system is perfect, and some raise large concerns with a truly cashless society. From a reluctance to adapt to a cashless society to concerns with banking security, going completely cashless requires plenty of willing participants. While we’ll likely never see a day where physical currency is worthless, many are still confident in its staying power, along with the sense of security that physically holding currency provides.

Resistance to a cashless society isn’t new to the COVID-19 crisis, as the Access to Cash Review once called on the government and lawmakers to stop shops offering cashback, especially when the request was made without making a purchase. This continued push has persisted even to 2020, with the government’s budget in March detailing further protection for those that want reliable access to cash. Just as some don’t wish for a cashless society, many still rely on cash and face-to-face banking.

There’s also the age-old problem of disclosing too much information, as many fear that cashless transactions risk their banking information being stolen. Experts in the financial industry are attempting to address this issue, such as fintechs, who strive to assist electronic payments without the use of bank accounts. The truth is that when using cash, you don’t often grant the opportunity to access your banking details, and even the possibility of that happening is enough to put many people off the notion of a cashless society.

Is the Future Cashless?

While arguments can be made both in favour of and against a truly cashless society, COVID=19 has made it clear that many businesses can either thrive from it or need to go cashless to survive. The amount we rely on cashless transactions, as well as how common they become, may depend on how quickly we can handle and eliminate COVID-19, yet it’s becoming likelier by the day that the pandemic's impact will be long-lasting, if not felt forever. 

Whether this extends to being a completely cashless society or not is yet to be seen, but for now it’s clear that during a pandemic and the lockdown going cashless is a safe move, no matter what industry it’s utilised in.

The need for people across the world to save as much money as possible amid adverse foreign exchange rates has never been greater. Thankfully, money transfer companies are known to offer rock-bottom rates banks can’t match. And the best part is there are dozens of service providers for consumers to choose from. As is often the case, higher levels of competition result in consumers benefiting from superior costs and better service.

Foreign Exchange Trends

The world is home to 180 currencies that are recognized by the United Nations, so there are plenty of trends that have played out since the start of the pandemic. At the exact same time, other external factors compounded the weakness, such as oil prices dipping into negative territory for the first time.

Currencies mostly tied to oil, such as the Canadian dollar or Norwegian krone were more impacted than the Japanese yen -- widely considered as a safe-haven currency.

The outlook for global currencies remains as unclear as ever yet people across the world will still need to exchange currency for a plethora of reasons. One example of how someone can take lower the risk from further unfavorable currency exchange movies is through forward contracts. Simply put, a forward contract offered by an online money exchange platform lets people buy or sell a currency pair at a pre-arranged exchange rate on a set date.

Impact On Expats

Tens of millions of people across the world decided to leave their birth country and set up roots elsewhere. The COVID-19 pandemic and deteriorating exchange rates likely had many of these people worried about their finances for the first time.

This is especially true for people who hold assets and investments in their birth country and exchange a bit of money at a time.

As an example, an Australian expat living in Thailand would have been able to convert 1 Australian dollar to just shy of 21 Thai baht at the start of 2020. At the peak of the COVID-19 global market crash in March, the same 1 Australian dollar would have fetched just 18.8 Thai bahts. 

At that time, expats who had budgeted to live off say 1,500 Australian dollars per month in Thailand would need to dig deeper into their pockets to live the same lifestyle.

Fortunately, by the end of June the Australian dollar rebounded any concern proved to be brief. But this goes to show how fast currencies can move in either direction.

Of course, the opposite scenario could play out where expats are in a better financial position by default of moving to a country that has seen its currency weaken. In this case, it may be unwise to start living life frivolously as any near-term trend is never a predicament of a longer-term outlook.

Impact On Money Transfer Industry

The global money transfer industry, much like any other sector, has seen its business impacted by the COVID-19 pandemic. It would be difficult to quantify the financial impact since many of the companies in the space are private and are under no legal obligation to disclose their performance to the general public.

So, we can take a look at the few public companies that provide updates to their investor base. Moneygram is one example.

The Australian stock exchange-listed company said in early June that its digital transactions grew by 100% year-over-year in May, marking a notable acceleration from 57% growth in the first quarter.

The company also said it increased its active digital customer base and these customers transacted more frequently compared to prior months.

We also know this was the case with PayPal as the company said at an industry conference it benefited from older people joining the platform.

It would be reasonable to assume that a trend seen at one company is likely playing out across the entire sector, although to varying degrees.

Where The Growth Is Coming From

What likely happened behind the scenes is money transfer space saw an influx of new customers who had no choice but to turn to online venues for their money transfer needs.

These first-time users needed to send money to family or friends who found themselves in tough financial positions -- as has been the case among untold millions of people worldwide.

Some money transfer services tried to capitalize on the new surge in demand by offering unique promotions. Moneygram, for example, partnered with Uber to provide drivers and couriers with a discount on money transfers sent to family and friends worldwide.

But the money transfer industry faced a notable headwind as regular and planned cross border transactions were either put on hold or canceled. Those that provide global payroll solutions lost business from companies that had to suddenly furlough or fire their employees scattered across the world. 

On the personal side of the business, many people had to put on hold or permanently cancel plans to move abroad. Transferring large sums of money across borders at a rate traditional banks can’t compete against is a major selling point as it can save consumers tens of thousands of dollars versus banks.

It isn’t clear if these real estate deals will resume once the pandemic is resolved. Some people would be very excited about the opportunity to proceed with their lifelong dream of retiring abroad. Others may not be able to fathom the concept of being away from their loved ones.

Conclusion: Stay Up To Date With Trends

The financial impact from the COVID-19 pandemic could last years after it is eradicated. The toll will certainly be felt in the foreign exchange market as some economies will prove to be more affected than others.

Countries that experience a quick and swift rebound will likely see their currency appreciate in value given the likelihood for a stronger economic recovery.

It is certainly too early to predict which countries will fall in this category and everyone is urged to stay up to date with economic news and trends. Staying informed and acting accordingly could save a lot of money by avoiding exchange money at more costly rates.

Foreign exchange (forex) accounts for the world’s largest financial market. In fact, it was valued at $6.6 trillion (£5.3 trillion) last year, with London reigning as the largest forex market with a 43% share.

Here are some things that you need to know before making your very first trade:

Learn the basics

Forex, or the world of finance in general, can be very intimidating for the average person. The first step to breaking that barrier is to learn the fundamental aspects as well as common forex trading terms. Here are a few key terms that should be in your vocabulary:

• Currency pairs - Forex is always traded in a pair of currencies, which represents the value of one against another. For example, GBP and USD is represented by GBP/USD or vice versa.
• Base – The first currency in a pair. For example, GBP in a GBP/USD pairing.
• Quote – The second currency in a pair. For example, USD in a GBP/USD pairing.
• Exchange rate - The amount of quote currency needed to buy 1 unit of the base currency. For example, GBP/USD = 1.2252.
• Bid - The price at which you’re willing to buy the currency pair.
• Ask - The price at which you’re willing to sell the currency pair.
• Pip - The smallest price changes given an exchange rate.
• Spread - The difference in pips between the Bid/Ask prices.
• Leverage - A trader’s borrowed capital from a broker’s credit. This allows traders to fund their trade without having to pay the full value upfront.

Understand the factors that affect forex

Knowing the right words is only the first step. You’ll need to have a working understanding of what moves currencies in the first place. This allows you to make an educated trade and minimise the risk of incurring any losses. These are some of the most important factors that increase trading risk:

• Interest rate - Rising interest rates generally correspond to a stronger exchange rate, while falling interest rates can result in a depreciation in currency value.
• Country - Take note of the country’s economic stability, especially for developing or third world nations.
• Counterparty - It refers to the broker or trading platform used which come with their own risks.
• Leverage - The more leverage you acquire could potentially lead to a bigger loss.
• Transaction - Communication or confirmation errors that can lead to a loss. For instance, significant time difference between markets leave plenty of room for market fluctuations, which can impact the trade made.
• Politics and Economy - Both have significant impacts on a country’s performance in the forex market. For example, the expected 25% downfall in the economy of the UK during Q2 will likely lead to a weaker performance of the GBP against other currencies.
• Liquidity - The high liquidity of the forex market means the demand and supply can vary wildly, which can affect market prices.

Choose a reliable forex broker and trading platform

To start trading, you need to find a reliable broker and the right trading platform. A broker is an individual or a firm that facilitates your trade. You buy or sell through a broker, who also gives you the leverage needed. When choosing a broker, find out whether they are regulated by The Financial Conduct Authority. See if they also offer a trial period so you can sample their services before committing to a certain brokerage firm.

A trading platform, on the other hand, is the software that allows you to access and trade in the forex market. Most offer demo accounts, which enable you to experiment and practice trading under real market conditions. Understand that trading forex is not without risk. However, knowing basic information, such as industry terms, allow every kind of trader to make more favourable decisions.

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