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Expats and retirees paid in sterling feel exchange rate pinch
| Published: | 9 Jan at 6 PM |
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Tagged: Currency, UK, South Africa, Canada, Working Abroad, Euro, Exchange Rates, Pension Transfer, England
The shocking decline in the value of the pound sterling against major currencies is hitting UK expat pensioners as well as expats working overseas and being paid in sterling.
The majority of UK expats are either retirees drawing pensions originating in the UK or professionals working on overseas contracts including sterling payments. Both groups are now being hard hit by the pound’s spectacular fall against a basket of major currencies. Overall, the currency has dropped 11 per cent over the last two years, but its fall post-Brexit was slightly less than in previous months. .
According to expatriate bank Lloyds Private Banking, whilst the drop in value of the pound sterling will hurt Brits holidaying overseas, UK state pensioners who’ve moved abroad to live economically will also be hit and may find it far more difficult to manage. The only winners will be expat professionals paid in local currencies and regularly transferring funds to the UK.
Sterling’s value against the US dollar has fallen by 17 per cent, leaving the exchange rate at its worst since 1984. Its track record against the euro has been slightly better, but the drop of 13.3 per cent is still significant for those on UK state pensions. During the first six months of 2016, the pound dropped against 54 of the regularly surveyed 60 world currencies, with falls of 51 per cent after the referendum vote was announced.
Exceptions to the rule are expats living in Egypt and Mozambique, with sterling showing strong gains of 105 per cent and 23 per cent respectively. In contrast, expats living in Canada and Indonesia saw a drop of 20 per cent, those in South Africa saw a 22.6 per cent fall and expats in Russia fared worst with a 28 per cent drop against the rouble. With Brexit approaching, it’s difficult to forecast the future of sterling, but pessimistic bankers aren’t hoping for a miracle.
The majority of UK expats are either retirees drawing pensions originating in the UK or professionals working on overseas contracts including sterling payments. Both groups are now being hard hit by the pound’s spectacular fall against a basket of major currencies. Overall, the currency has dropped 11 per cent over the last two years, but its fall post-Brexit was slightly less than in previous months. .
According to expatriate bank Lloyds Private Banking, whilst the drop in value of the pound sterling will hurt Brits holidaying overseas, UK state pensioners who’ve moved abroad to live economically will also be hit and may find it far more difficult to manage. The only winners will be expat professionals paid in local currencies and regularly transferring funds to the UK.
Sterling’s value against the US dollar has fallen by 17 per cent, leaving the exchange rate at its worst since 1984. Its track record against the euro has been slightly better, but the drop of 13.3 per cent is still significant for those on UK state pensions. During the first six months of 2016, the pound dropped against 54 of the regularly surveyed 60 world currencies, with falls of 51 per cent after the referendum vote was announced.
Exceptions to the rule are expats living in Egypt and Mozambique, with sterling showing strong gains of 105 per cent and 23 per cent respectively. In contrast, expats living in Canada and Indonesia saw a drop of 20 per cent, those in South Africa saw a 22.6 per cent fall and expats in Russia fared worst with a 28 per cent drop against the rouble. With Brexit approaching, it’s difficult to forecast the future of sterling, but pessimistic bankers aren’t hoping for a miracle.
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