Following a tumultuous week for the UK foreign exchange (FX) market in the wake of the Government’s mini budget announcement, London-based FX company Lumon, which specialises in international payments and foreign exchange risk management for private and corporate clients, is reporting a 30% increase in clients ‘forward buying’ currency.
This involves utilising long-term contracts that lock currency conversions away at today’s rate for payments in the future.
The rapid future-proofing pursued by both private and corporate clients comes after the British pound plummeted to record low levels earlier this week as a direct response to the planned tax cuts and increased public borrowing announced by Chancellor of the Exchequer Kwasi Kwarteng. Analysts are predicting that the pound could reach parity with the US dollar soon and the month-on-month drop of the pound is very likely to be the biggest since after the Lehman Brothers collapsed in the fall of 2008.
