Brits abroad - managing your money post-Brexit

Sending money home to the UK? Our financial guru explains what you need to know.

Jason Cook June 29, 2016

Dare I say it; UK politics has never been so intriguing! Whatever your view on Brexit, democracy is doing what it says on the tin.

If you’re one of the roughly four million Brits living abroad, and one of the 120,000 living in the UAE, you're probably now asking yourself: what does all this mean for me and my finances? After all your home currency, sterling, has declined 11 per cent from the 1.50 level it was at before the referendum result was known.

Well to figure that out, you first need to understand what Brexit means for the markets. 

First, it goes without saying that virtually all the world’s currencies have risen sharply against sterling this week, as investors get to grips with this bombshell of a result. This makes this a unique opportunity to rebalance the currencies you own and make some money. 

To start, the US dollar has gained as much as 14 per cent against the pound at the time of writing – that’s the buck’s strongest in decades. If you have excess USD and use GBP regularly, now is a good time to convert some of your money.

But before you run to the nearest exchange be smart, as we may see more dollar strength. For large amounts negotiate the rate and trade a few times over the coming months. Make it a habit to convert excess GCC currency to US dollar. You don’t want to be one of those people heartbroken because the peg moved overnight, and that is a possibility more than ever now.

What’s more, because your local GCC currency is pegged to the greenback, it’s enjoyed the same sharp rise. One British pound now equals 4.92 Dirham, in comparison to its average over the last few years which was around 5.6. That means if you’re a Brit paid in dirhams, that’s a 20 per cent pay rise over the last two years!

A word to the wise – if you are sending money back make sure you see a UK regulated specialist first. You may be missing out on tax breaks given by the HMRC to expats. The rules are complex so professional advice is money well spent.

Stocks & shares

Onto the market we all know and love, the FTSE100. She had a little wobble, many perhaps were surprised how resilient she was. I suggest once the market understands the challenges ahead it will be business as usual and the fundamentals will be again the measure of any correction ahead. 

Hang on to your "safe haven” currencies. Unsurprisingly, safe haven assets in all forms rose sharply, across a range of asset classes from commodities (gold) to German Bunds (fixed Interest) to the Swiss franc or Japanese yen (currency), which investors buy in periods of uncertainty. They will no doubt gain in value over the coming months or even years as the UK finds its place outside of the EU. 

Great things, small packages

To sum up, there’s no doubt that the UK’s decision to leave the EU is an almighty shock. The UK will have to come to terms with a smaller political voice, but that in the end is what was voted for. 

On the global economic field, unlike the England football team, the UK will still remain a force to be reckoned with. Its legal, political and financial institutions will continue to lead the world in quality of thought and purpose, ingenuity and expression. Great things come in small packages. 

Jason Cook is a financial advisor and head of High Net Worth at Guardian Wealth Management;

All rates and figures are correct at the time of writing.