Posted by Allison on 6 September 2016, 15:46
Listen to any report on the state of the British pound following the Brexit vote and you will hear doom and gloom. The pound has fallen significantly. The pound is now weaker than it was prior to the vote. Everyone looking to go on holiday to Europe will find it far more expensive to do so now. Everyone looking to go on holiday to other popular destinations might find it more expensive too.
Is there any good news for anyone looking at this part of the equation?
Actually, yes. Freelancing is a popular form of work for many self-employed people. The internet age has led to the world getting smaller in a way that was never possible before. It’s easy to send an email to someone in, say, America, and agree on work to be done with them in mere moments. They pay you via an online payment provider, the money is in your account within seconds, and you begin work. It all happens very smoothly indeed.
Freelancers in the UK have actually benefited from the drop in value of the British pound if they get paid in US dollars. If we take a look at the exchange rate on 1st June this year, one US dollar was worth 0.6923 – so around 69p. We’ll discount any charges or exchange rate fees you’d pay while transferring one currency to another, as those will be in force whenever you perform the transaction.
Let’s further assume you did work on that day and you were paid $100 for it. Translate that into UK pounds and you get roughly £69. Now let’s fast-forward to the date after the referendum, which took place on 23rd June this year. Interestingly, the date of the referendum itself garnered an exchange rate of 0.6725, so that $100 payment would convert into £67. But once the Brexit result became clear, the exchange rate saw a massive change.
On 24th June, the pound registered an exchange rate of 0.7297. So all those freelancers who were getting paid in US dollars were now getting nearly £73 for every $100 of work they did. That’s an increase of almost £6 overnight – for every $100-worth of work.
It’s an interesting take on the situation, and of course it doesn’t just apply to freelancers. Anyone with any kind of business that is paid in US dollars will be benefiting from the weaker pound. Just as there are pros and cons to many situations in life, there are pros and cons to the weaker pound as well.
Are you affected by the change? Do you automatically bring in more money now working as a freelancer or the owner of a business than you did before the vote came in?