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What is your Q4 strategy? 4 things you should be thinking about.


Europe tends to take a holiday during August and it takes the work force about four weeks to get back into their groove once it is over. Maybe this is why the final quarter of each year is, anecdotally, perhaps the most unpredictable and informative with regards to commentary on the relative health of economies like that of the United Kingdom.

Generally speaking, the pound rises as the year enters Q4. Whether this is because the

markets are getting excited about the potential lucrative trading that the holiday season promises, or because circumstance tends towards speculation as to the monetary policy for the year to come, being prepared to buy your currency when clouds part should be the least a business does relative to their FX strategy - whether that be forward or from the spot market.

What can you do to take advantage of positive movements in the rate and how should you approach trading currencies during the festive period?

1. Does the current rate of exchange allow you to operate at the margin you want? If so then prolonging the use of that rate should be your priority.

Too often we see businesses who can afford to buy forward and lock in a rate for up to a year because the current market affords them that option, but they chose not to do so because they would rather wait and see if the rate moves in their favour more. We take the view that a sure thing is better than a maybe.

So, on entering a busy period, when payments to your suppliers will no doubt increase but certainty over what rates might do will not, ready yourself to lock in at least a proportion of your FX exposure. At the very least give us a call so we can emphatically explain to you why you'd be foolish not to (our number is littered across our site!).

2. If cash-flow is a concern at this time of year then you can try negotiating with your supplier to elongate your payment terms.

Many businesses do not buy forward because they are worried about having the cash needed to settle a contract. What happens if sales don't go the way you expected? Depending on your industry, what happens if your client takes longer than you thought to pay you?

Well, Prime Cap does everything it can to remain flexible in these types of scenarios. Whether it means 'rolling on' a booking to give you longer to settle, or it may mean reducing the amount of currency you do buy forward so that you're not put under too much pressure.

3. Make use of our unique alert triggering wrappers so that you don't miss the rate you need.

Hand in hand with the idea of the year's final quarter being bubblier and potentially a time for increases in the value of currencies like sterling goes the assumption that the rate you have been waiting for will miraculously materialise at some point before New Year's Eve. Ironically though, with all the bank holidays in the UK and national holidays in some of the main markets serving the global currency clearing high-ways, Q4 has fewer working days that most of the rest of the year.

What happens if the rate you want appears, but your broker is closed or it only materialises for a fraction of a second before you realise you need to be online buying some currency?

Well, as well as the round the clock access you get with our free-to-use online platform our fully managed, bespoke and execution only packages mean you can pop one of our team on round the clock alert exclusively for you.

Using simple yet relatively inaccessible (on the high street) mechanism we can structure a system whereby currency is bought for you when the rate you want becomes available, regardless of when it appears. If the rate never materialises then your currency remains as it is - however, should the all important break-even mark be breached we can either execute a booking and notify you of the cost, or simply give you a ring and ask you for an instruction. These tools also work in conjunction with the aforementioned forward contracts, so you can make the entire process water tight, sit back and let our traders deal with everything.

4. Limit any potential loss...

In the same way that we can put in place tools to make sure you dont miss out on the rate you want, depending on your appetite for risk we can devise some simple protocols that mean you dont have to deal at a rate of exchange below a certain level.

Whilst we initially referenced certain rate movements as the relate to GBP sterling...with every increase in the value of one currency we see sellers of the other who are worse off.

So, if we suppose that the company selling UK made GBP manufactured goods in the US are earning in USD, then, at a time of year when the pound typically strengthens, they are going to see margin take a knock when bringing those earnings back into their land of operation.

We advise you to lock in your rates 'forward' the moment your desired margin is achieved. By the same token, for sellers we advise buying GBP forward the moment your margin is threatened; and, because has been very strong for the majority of 2017, you USD sellers out there should have been jumping from forward contract to forward contract, making hey whilst the sun shineth.

Helpfully plucked from the Prime Cap DATA Centre this '5yr' chart shows the relationship between the pound and the US dollar since late 2013.

You will notice something of a peak in recent trading which in fact occurred as 2016 drew to a close.

This is a fine example of why anecdotal evidence should never be relied on over empirical.

GBP was punished by global markets as Europe returned to work following its

annual month off.

Bucking typical trends, GBP struggled to make the same gains as it might usually upon entering the final quarter of the year. However, companies earning in USD were in for a windfall. It is fair to say that due to import costs increasingly since the pound weakened, margins have been squeezed, however, this has been offset to a certain extent by both increase affordability in previously unattainable markets and also fortification of margin for certain sectors because of improvements in the value of the global reserve currency.

Now, Prime Cap can use all the skill we possess (enormous, bone crunching, chin quivering skill) to make sure that when/if/should rates of exchange approach a level you feel threatens your margin to an unsatisfactory extent, our system triggers and we buy forward the currency you want.

Your exposure is immediately eliminated and yet, you've remained in the market for as long as possible, enjoying a better rate, but with a protective strategy in place.

Call us...and we shall tell you more...02031728193.

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Prime Cap Payments Limited (T/A Prime Cap | Prime Cap Payments | Prime Cap Global Payments) is registered in England and Wales No: 10755730. Registered address: 27 Old Gloucester Street, London, WC1N 3AXPrime Cap is partnered with, and a programme manager of, Ebury Partners UK Limited who provide Prime Cap's FX and payment services.  Ebury Partners UK Limited is authorised and regulated by the Financial Conduct Authority as an Electronic Money Institution (Financial Services Register No. 900797) and is registered in England and Wales (registered no. 7088713). Registered office: 3rd floor, 100 Victoria Street, Cardinal Place, London, SW1E 5JL.  Ebury Partners UK Ltd is registered with the ICO with registration numnber ZA345828.