sherbert

The pound took another plummet this week thanks to Teresa May's announcement that the Brexit process will be starting soon.

I've got a chunk of money in the UK and am wondering what others are doing regarding any UK savings they have?

If I transfer everything to the US now, I'll lose a lot.

If I wait, who knows whether the pound will rally or dip even further.

What are peoples' thoughts? Are others waiting, getting everything out now...sobbing in a corner....

Owen778

Luckily, I transferred most of my UK savings a couple of years ago. However, I still had some left, and I wanted to transfer enough to remove the FBAR reporting requirement. I failed to do that before the vote, because I was complacent, but I transferred two thirds of the remaining money a few weeks ago, and managed to get a rate of 1.3242. Transferwise are currently quoting 1.2646.

Financial planning advice would usually recommend you split the transfer into multiple parts, to reduce the impact of price volatility. However, given that both the short-term and long-term trends for the pound are downwards, and that more smaller transfers would mean a exchange rate and/or more fees, I would recommend splitting it into a few large amounts. Transfer some (half? a third?) now and some later. That way, you can be glad you transferred some now if it goes down, and glad you kept some back, if it goes up.

Just my opinion, anyway. (Don't take this as financial planning advice etc.)

Tirytory

We're in the same position. We have a reasonable chunk of money that we are kicking ourselves we didn't transfer pre Brexit. In reality I can't envisage the £ going up anytime soon, only further down. We are considering investing some of it into the mortgage on our rental house in the UK but I still can't decide if this is a good idea or not

Pulaski

My sterling exposure is almost entirely locked up in pension accounts, but I am not unduly worried about the exchange rate as it has floated back and forth betweek $1.04 and $2.40 over the past 40 years, and has been as high as $2 within the past decade, and no doubt will continue to move up and down.

And the one thing I am certain of is that sterling isn't in a death spiral and it will recover from its current dollar value.

HumphreyC

At the current rate all the bad news - (possible negative interests rates, 'Hard' Brexit, loss of foreign investment) seem to be priced in. Suspect it will fall some more and then begin to creep back up but after 5 years of being wrong I've given up trying to predict what cable is going to do.

MidAtlantic

I agree.

I was fortunate enough to be able to exchange some (not enough!) GBP at $2 in 2007, just before I moved here.

Pulaski

The banks can't make money trading FX with their teams of economists and stratetists, the talking heads on TV are as often wrong as right, literally. If anyone could really predict where the exchange rates will be even two weeks ahead, they would be able to make a fortune.

Occasionally someone gets lucky for a few months, but nobody pulls of the trick of predicting FX rates consistently beyond a few months, and only rarely even that long!

Al that said, I agree that most of the "bad news" is probably already priced in at the current rates.

sir_eccles

Ultimately you may be right but I don't expect it to recover in value tomorrow or even next year. Maybe talking a decade.

Owen778

The first statement is definitely true, but only to the extent that volatility will continue, not as a statement that the rate will continue to float within its previous bounds.

And I don't see how you can have certainty in that second statement. It might recover, or it might never do so. The long-term trend for the pound against the dollar is downwards. You can see a graph from 1915 to present here: Graph of £/$ exchange rate (1915 - today)

Edit: i notice your second post completely disagrees with your certainty.

Pulaski

I am not worried if it does take that long, or longer. It will like peak and drop several times again before I retire, and by which time anyway, my exposure to sterling will likely be a single-digit percentage of my net worth.

sir_eccles

Looking at your chart I don't think it is fair to draw a straight line from 1915 (5:1) to today (1.2:1) and call it a trend, too many external factors. Looking from 1980's onward is probably a safer era to draw conclusions from. I would hope that a realistic rate would be around 1.50.

Mangaboy84

I would prefer it not taken a decade to recover, i wanted to move money accross this year, made plans while it was in the 1.40, had a rethink after the vote so set at 1.30 now its dropping to 1.20 and im thinking **** you i wanted more money from the exchange to live off of till i found work next year. gunna go back to sobbing in the corner

Owen778

I'm not claiming that there's a linear trend from 1915. That would be silly. More that the overall change in the rate is consistently overall more down than up. And much of that is due to internal factors, specifically all those that contributed to the strengthening of the US economy relative to that of the UK.

It might be. Or it might, post-Brexit, be 1.2, for example, and never reach 1.5 ever again. A lot of it will depend on business's reaction to the legal and regulatory changes that come with Brexit. And those are not yet known.

Pulaski

The part of the chart prior to the early 1970's is entirely irrelevant to everyone other than historians. It is fairly obvious from the chart that until the early 1970's exchange rates were pegged at fixed rates fo extended periods, and that is no longer the case.

In the period since exchange rates were allowed to float freely, the best fit line through that chart is close to horizontal and somewhere around $1.60/£1.

In a general sense, notably in the 1970's and 1980's, rates were affected by differential inflation rates, and those can potentially "lock in" a movement in exchange rates, but inflation has hardly been an issue for the past 25 years.

No, not at all. The only "certainty" I have is that the exchange rate will continue to be volatile. I believe, firmly, that the value of sterling is close to the bottom of a trough and will recover from here. (Now I sound like one of those talking heads on TV. )

sir_eccles

Agreed, too many unknowns at the moment to even know which way is up.