A forward exchange rate contract is a way of insuring your contracts (such as buying a property) against fluctuations in the exchange rate.
For example, if you agree to buy a house for Euros 20,000 an appreciation in the Euro, could increase the Pound Sterling value by a considerable amount.
The way forward exchange rates work.
On a particular day, there will be a spot price for future contracts between the Euro and Pound. If you buy this contract then you are able to exchange money at a specified day for this particular price.
It means that you can have certainty that you will be able to buy foreign exchange at a certain price. It enables you to have insulation against rapid fluctuations.
This is an example of a bank offering forward exchange contracts