Gulf News analysed currencies like the British Pound and the Euro to see if a money transfer now is a win or a wait-it-out situation. Image Credit: Shutterstock


Against the UAE dirham, the British pound and the Euro are expected to weaken slightly in the coming weeks from its present levels. Here's how you can take advantage of these upcoming rates when remitting money to the UK or anywhere in Europe.

Dubai: Thinking of sending some cash to the UK or anywhere in Europe? Hold on to your dirhams! Just like booking a flight, timing your money transfer can save you some serious money.

The first step is figuring out if the currency in the country you are remitting to is going to rise or fall in value soon? This can make a big difference in how much money your friends or families end up receiving after you send.

Gulf News analysed currencies like the British Pound and the Euro to see if a money transfer now is a win or a wait-it-out situation. While these currencies are less prone to fluctuations than some South Asian ones (think Indian Rupee, Pakistani Rupee, and Philippine Peso), even small changes can add up to big savings when you're sending a hefty chunk of change.

Weakening currency? Wait for the drop! If your home country's currency is taking a tumble, sit tight! The exchange rate will get better as it weakens, so you can send more money later.

Currency on the rise? Send now and save! On the flip side, if your home turf's currency is getting stronger, don't delay! The exchange rate will only go up, so remitting now saves you money in the long run.

British pound to get stronger or weaker?

“The British pound (GBP) or Sterling’s exchange rate has been getting steadier since the year began, which would have steadily discouraged remittances and overseas transactions,” explained Amit Trivedi, UAE-based forex analyst and trader.

“However, the pound to US dollar exchange rate has been closer to the bottom-end of the historical trading range, which caused it to drop in value against UAE dirham as well. As it was flagged that rate cuts can't be ruled out in the UK with inflation easing, and more so after the European Central Bank (ECB) cut rates on Thursday, the pound will likely stay remittance-friendly in the coming weeks.”

However, analysts are widely flagging that the pound will find less room to fall in value against the US dollar, as the dollar is seen largely unchanged now with the US central bank signalling lesser rate cuts in 2024. “So, the pound, now at 0.78 against the dollar, can drop in value to 0.80 levels soon,” added Trivedi.

“Similarly, against the UAE dirham, the pound value is seen weakening slightly from its current level of 0.21, which implies that remittance plans will likely stay in place or get postponed to when the value drops, and you get more value for your dirhams when remitting overseas.”

What does a weak pound mean for you?
While the weakness of the pound isn’t new, the current levels are still favourable to those looking to remit. But what else does such currency weakness mean for your money?

“Because of sterling’s fall against the dollar, now might not be the best time to invest the reduced pound in shares or global stocks for UK investors, which are mostly dealt in the now-strong US dollar,” noted Brody Dunn, an investment advisor at a global wealth management firm located in Abu Dhabi.

“But those with savings in the UK might finally have something to smile about as cash deposits are finally beginning to pick up, albeit still well below the rate of inflation. As the central bank is yet to indicate whether or not the economic growth is still in a state of limbo, only time will give clarity on forex rates.”

How a slightly weaker euro can affect you

Against the US Dollar, the euro exchange rate has dropped in value against the US Dollar since the start of the year, but steadied last month in the run up to the European Central Bank’s meeting yesterday, explained Dunn. It is at 0.92 versus the US dollar currently.

“The decline of the euro at the start of this year has encouraged people to remit overseas. The euro’s fortunes are not looking to change drastically this month against the US Dollar, as the US won’t be cutting rates as fast as Europe, because of which remittance rates will continue to stay favourable,” added Trivedi.

However, analysts also widely expect the weakness in the euro exchange rate to be limited against the US dollar, particularly as ECB have decided to cut rates. “ECB cutting interest rates sooner than the US Fed will widen the interest rate gap between the US and the Eurozone, putting downward pressure on the Euro against the US dollar,” Trivedi added, which is in line with the recent forecasts from top lender JP Morgan as well.

“In other words, the Euro will stay lower in value, which is being reflected against the UAE Dirham as well. What this means to expats is that it is cost effective to remit now and take advantage of the current rates.”

Bottom line?

“If you concern yourself with exchange rates when you’re about to head off abroad on holiday, know that changes to the currency’s value have wider ramifications beyond the price you’ll pay overseas,” said Anil Pillai, a UAE-based banking analyst specialised in forex payments.

“When it comes to remitting the euro or the British pound in June, trends are not expected to reverse anytime soon, so it would mean that it would be comparatively cost-effective to remit more soon. So, it does brighten the remittance prospects for expats.”