Wed 6th June 2012
In this post I want to answer the question: is it better to buy pounds in Canada or the UK? This might be of use if you’re a Canadian, intent on emigrating to the UK but unsure where to get a good exchange rate, or perhaps a UK expat hoping to repatriate funds.
In short, it makes almost no difference if you buy pounds in Canada or the UK. This is because the interbank exchange rate (i.e. the rate you see on places like the BBC or Google Finance) is international, and so not dependent on where in the world you are. In addition, the actual exchange rate you receive (which will be lower than the interbank rate) depends more on the service you use, such as a bank or foreign exchange broker, than which country you’re in.
So there’s no advantage to using a Canadian or UK broker in particular?
In terms of the exchange rate, no. This is because both Canada and the UK are open market economies, and you’re free to buy both UK pounds and Canadian dollars anywhere in the world. This compares to Brazil, for example, where you can only buy reals inside the country, so that the banks can charge large amounts because of the absence of any alternative.
Aside from the exchange rate, does anything else make a difference?
It can be a good idea to use a service in a similar time zone to you. This is because, if you want to change currencies with a service several hours ahead or behind, that only gives you a limited window in which to conduct business. In that sense, buying pounds from a UK broker while you’re in the UK, and vice versa, makes sense.
So if being in Canada or the UK doesn’t matter, what should I look for?
The most important thing to be sure of when you’re buying pounds is that you’re comfortable with the people you’re doing it with. This is because, between foreign exchange brokers, the exchange rates all tend to be extremely competitive (especially compared to banks.) This means that the emphasis falls on providing a good service. You should feel sure that your broker is helpful, professional, and able to provide the best transfer for your circumstances.
Is there anything else to keep in mind?
Look for a broker that adheres to all legal financial requirements. In the UK, this means the service you choose should be authorised by the Financial Services Authority. By being authorised by the FSA, brokers maintain client funds in designated client accounts that are ring-fenced and protected. It means you’re using a fully secure service. The same holds for the Canadian equivalent.
Get in touch
I do hope this post has been useful.
If you have an questions not answered here, or would like to find out more, don’t hesitate to contact us at foreign exchange specialist Pure FX. One of our specialist dealers would be delighted to provide an in-depth personal response to your query, free of charge.