BristolUK

I use that website just to see their rates.

You must have speed-read too fast and missed where I said
"they say that is somewhere between the buying and selling rate" and how I got "a cent or two off the then XE rate" so I know it's not the rate you get.

Sorry...don't mean that to sound sarcastic

I haven't had the need to transfer anything for a few years now, it's just idle curiosity.

Edo

Just had a look at Onada. It seems like a Forex trading company when you have to bid on the currency to get the desired rate. Is that right or am I missing something?

SchnookoLoly

Pretty much. You basically lock in a rate you are going to trade at, instead of being held to a rate on a given day. It does end up being a shot in the dark, since you never know if the rate is going to go up or down, but you make a good call. (Rates are looking good right now, haven't been at 1.82ish in years!) So you pick that rate, then when you transfer you pay a fee of $20 for the wire transfer, but it goes right at the rate you selected.

Quinna

Thanks for the clarification.

I must admit I was confused, which is why I asked the question. One or two percent off the mid-market rate is unheard of these days unless you are moving over 1 million.

I added the example for the benefit of anyone who may not be aware - it is often missed.

Quinna

Thought you guys might like this chart - CAD/GBP Chart

It shows that at 1.82 it could go either way from here but also confirms that 1.82 is the best rate for a long time.

I have not used futures contracts myself yet but I think I will if the exchange rate goes convincingly below the red line in the chart.

ChrisCanning

Hi,

This is my first post on this forum.

I was advised to create a profile by one of my clients who mentioned that there seems to be a lot of confusion about Foreign Exchange / Money Transfers / FX etc.

I have worked in the FX industry for over 10 years and I am very happy to help with any questions & queries. I have been in contact with Sue @ British Expat, and due to Forum Rules I am obviously not allowed to promote my own business so please be aware that I can only offer general help about services on offer and they industry...

Please feel free to ask any questions that you may have... I will hopefully demystify the process. It really is simple and nothing to be worried about.

Chris.

ChrisCanning

A lot of the questions state 'What company should I use'.

Nowadays, there are hundreds of currency companies in the UK. Compare this to a few years ago when there were less than 10.

There is no simple answer to which company is best. It really does depend on your situation. Some companies are better at small payments, some companies are good at medium-sized transfers, and others are good at extremely large companies. All should provide you with a service which saves money compared to the bank.

Please do your research on the company you use. Not just a Google search!!! I would always suggest looking into their financials. Try and find their Companies House Registration Number. You can then download their financials. Alternatively, use a free service such as DueDil to check out them out.

Things to look for:

Ownership - Are they actually who they say they are?
Value - What is their turnover and value?
Security - THE MOST IMPORTANT THING!!! Satisfy yourself your funds are safe and protected

I would always contact the company and speak to them before you set up an account. Make sure you are happy with the person you are speaking to. Ask as many questions as you like. If there is anything you do not understand ask them to explain. Do they sound like they know what they are talking about? Do you trust them?

If you are transferring a large amount, maybe take a trip to visit them at their offices. Most companies are only open Monday-Friday, but it could still be worth meeting them, especially if moving large amounts.

I can not stress enough - even before you consider what rate they can offer, make sure your money is secure. If you need any further advice on how to see if it is secure or not then just let me know.

ChrisCanning

Final post for today.... "What rate should I get"

We all know what the mid market rate is through google / xe / yahoo. This is called the "interbank rate" and is the mid market rate. YOU WILL NOT RECEIVE THIS RATE.

Banks typically provide a rate which can be up to 3% / 4% / 5% away from the interbank rate. This is called the 'spread'. This is how they make money.

Currency companies make money in the same way, and usually provide a rate anywhere between 0.1% and 2% from the interbank rate.

The rate you will receive depends on the amount you are transferring. Any transfer above £10,000 should be less than 1% spread. (ie - If the interbank rate is 1.8200, then you should receive a rate better than 1.8018, which is 1%)

The better brokers will price around 0.5%, and for larger amounts they can get much tighter.

Several currency companies have online systems where you can book your own transfer. Others allow you to call up and book a rate over the phone. As a general rule, if you are transferring a larger amount, always try speak to someone on the phone. This will ensure that they provide you with the best possible price.


Currency companies shouldn't charge transfer fees. They make their money on the exchange rate difference as explained above. Be careful when dealing with companies that say they offer you the market rate - they don't! They will be making their money in other ways such as hidden charges, transfer charges and payment fees.

If anyone has any questions about the GBP/CAD rate, forecasts, trends etc just let me know...

Edo

Very useful info Chris. Cheers for that.

So considering the recent GDP data from the UK and no definite word on Canadian manufacturing data, where do you see the rate going over the next little while?

ChrisCanning

Hi Edo,

... good question!

In all honesty, I would be tempted to ignore any economic data from Canada as the real push/full will be coming from the UK. In recent months, the rates have been dictated by Bank of England monetary policy. The general view is that the BoE will be hiking UK interest rates, and this has strengthened the Pound against all currencies.

HOWEVER... these movements may have come slightly too soon and as such Carney (a Canadian!) recently mentioned that rates may not rise as soon as investors thought. We are probably looking mid 2015 now.

This has meant that we saw the GBPCAD rate fall slightly as investors pull out of the Pound.

I would keep a keen eye on any comments from Carney. Anything that suggests interest rates may rise in the near future will see GBPCAD push higher. However, anything that suggests that interest rises may be delayed will see GBPCAD fall.

As for short-term expectations - keep a keen eye on inflation figures out from UK and Canada this week, and also Retail Sales. If data for Canada (on Friday) perform well then we may see some strength for CAD at the end of the week...


Hope that wasn't too boring...!

Edo

Excellent analysis Chris. And there is definitely no doubt that the UK will increase interest rates, most probably by mid 2015. But they also don't want the government backed investments to suffer because of that cuz thats where the public mostly put their savings post 2008 crises when the interest rates were too low and people lost trust in the banks. The UK government has been sitting on huge piles of investment money from the public since 2008 that they probably don't want people to take out too swiftly. And from what I know from reviews and stuff, amongst certain other things, the increase in holding limit for NS&I Premium bonds to £40,000 in 2014 and again to £50,000 in 2015 indicates that the govt wants to prepare for the competition that it will face from the banks once the interest rates go up. And it seems to be working cuz the public poured £1.3bn just into the PBs in the very first month since the limit was raised. Although how long will those investments stay within the govt's accounts will depend on what other opportunities the markets will present.

jerry brewer

hi
Hsbc, get a uk account and a canadian account then either transfer for free if you are a premier customer, or write yourself a cheque and pay it into your gbp account in canada.
Either way it is free
And when you want to convert go to the bank they give you a better rate than on line.
Cheers
Jerry

ChrisCanning

Hi guys.

Jerry - great advice. I always tell my clients to open up multi currency accounts with their bank. Most banks will allow you to do this. Having a GBP and CAD account gives you a lot more flexibility. Also - online systems will never provide the best rates so speaking to someone can often help you achieve a better rate (and remember to haggle!). You may want to consider using a currency specialist if you are transferring larger amounts, or making frequent transfers. They (should) provide free transfers, and you should also find a decent saving on exchange rate as well. Sometimes this can be very significant. I deal with a lot of clients who buy properties overseas and the savings are sometimes so great that the extra money can often pay for a new kitchen!

Edo - I am tempted to agree with you - I can't see rates being hiked any time soon. Tomorrow will be interested to see the minutes from the most recent Bank of England policy meeting...

Chris.

Quinna

Great points Chris and Jerry.

Very interested to know the percentage difference HSBC are offering on exchange rates compared to the mid-market rate.

Just checking out their website and they say they offer, "preferential foreign exchange rates" but what is the spread? Can anyone check easily?

ChrisCanning

Hi Quinna,

If you have an account with HSBC then you will be able to get the current rate. If you let me know I can tell you their spread.

For comparison, Natwest print their daily exchange rates online (you can google "Natwest Exchange Rates"). They have 2 different rates - one for small personal currency, and another for commercial exchange. Today's example is below:

Mid-market GBP/CAD rate: 1.8223 (4pm UK)
Natwest Commercial: 1.7782 (about 2.5% spread)
RBS: 1.7645 (about 3% spread)
Natwest Personal: 1.7184 (about 5.5%)

It is quite clear to see how much money banks make from FX! Even if you had a commercial account with so-called "preferential exchange rates" they still take 2.5% on every transaction. That is £250 for every £10k transferred.