Concerned by currency volatility, financial-services business in Britain are stopping or advising versus foreign-exchange transactions during Thursday’s European Union mandate, in one indication of how this vote is disrupting the world’s monetary plumbing.In recent weeks, worries that a British exit from the EU will stoke worldwide economic uncertainty has roiled financial markets, stimulating wild swings in the pound, euro and other currencies and pressing banks to warn of more volatility to come.
That has actually prompted banks to warn customers against taking large positions in a market where currencies could gyrate and liquidity may dry up. Those nerves have included the high street, where currency-exchange and money-transfer services multiply given a big foreign-born population and the British love of vacations abroad.This is triggering anxiety for both professional traders and people who want to move money to and from Britain and are now fretted about being captured on the wrong side of a big move in the pound.
Lina Mikolajczyk, a U.S. person living in London, just recently received an e-mail from U.K.-based money-transfer service TransferWise.The exchange rate is likely to be unpredictable, the e-mail said, saying that it will stop sterling-to-dollar transfers from 6 p.m. regional time on Thursday up till when the referendum s outcomes come in on Friday.
Ms. Mikolajczyk transfers pounds to her U.S. savings account on a monthly basis.The email made me realize I have no backup, she stated.A TransferWise spokesperson stated that because it can’t forecast currency carry on Thursday, it has actually suspended sterling transfers to protect consumers from rate volatility.
Currency markets were mostly calm Wednesday, with the pound broadly the same against the United States dollar. On Monday, sterling had skyrocketed 2% versus the dollar, its biggest rally against the United States device since 2009. Currencies from the yen to the euro have also been volatile as viewpoint surveys reveal the 2 camps moving ahead or behind in this unmatched vote.
If the U.K. votes to leave the EU Thursday, the pound could fall by as much as 20%, according to HSBC, and may rise as much as 4% if Britons decide to remain, ING estimates.For transfer business, the risk is that the pound moves in between a customer establishing a transfer and paying the money that will cover it.