mrken30

1980 to 85 was caused by aggressive currency manipulation. I don't think the current devaluation was intentional, I may be wrong.

But to be fair world economics are a little different at the moment. I don't think there has been a time in history where so many countries have had zero percent rates or NIRP in some cases. Who knows what effect Brexit will really have on GBP, it has never happened before. In 1980 the Federal Reserve interest rate was almost 20%, I don't think the UK rates got that high.

Pulaski

You have a lot of "facts" there, but a good bit of information is missing.

For starters, US rates of 20% would, in the absence of other factors, lead to a high DOLLAR value, and a relatively weak pound. .... In fact sterling interest rates also got up to around 17% IIRC. ..... And how is "aggressive currency manipulation" different from deliberately letting a currency rise or fall and not trying to manage/fight the movement (from an economics perspective, there isn't).

With all due respect I think you are placing too much weight on your opinion that "now we are living in scary times", and that the past must have been "well managed, and operated to a carefully thought out plan".

Nothing could be further from the truth - by 1979 the British economy was in the crapper, and it took five years of seat-of-the-pants crisis management to haul what was worth salvaging of UK plc out of the toilet and try to put it on some sort of sustainable foundation.

Even with Brexit I see much less risk to the UK economy than there was 35 years ago.

steveq

If the BoE was worried, it could make the exchange rate rise VERY quickly, by increasing interest rates. Right now, a low exchange rate is great for exporters who create jobs in the UK.

I have been able to place substantial business in the UK, buying components for our equipment, partially on exchange rates, but mainly on the fact that the British will reply to an enquiry in a very timely manner, and US companies in my now considerable experience do not.

mrken30

What would happen to all those loans that were taken out at extremely low interest rates?

steveq

That's the rub. A lot of them were taken out by governments.....

kevntrace

I've got a chunk of money from an inheritance sitting in my UK bank savings account. It's been sitting there for about 2 years and I have no need to touch it, so I'm not worried about the decline in the exchange rate for GBP to USD.

In fact quite the inverse - I transfer (and have transferred, for the last 20+ years) money in the other direction, in order to pay my UK mortgage, utility bills, poll tax, life insurance and voluntary NI contributions. So the change in exchange rate is finally working in my favour.

I have an endowment policy that will mature in 2018, so a low exchange rate would impact that lump sum if I were to transfer it to the US. But similarly to the inheritance amount, I don't need it right now and I'm happy to let it sit in the UK bank until I do need it.

Cook_County

But ... from a pure US tax perspective...the currency loss is non-deductible personal loss. If you repay the mortgage capital you'll have to recognise income on that huge currency gain...and the endowment has no current tax deferral in the States. In other words if tax was the main issue you'd would not start from where you are.

sherbert

So, thanks for all the input but I'm still stuck.

I do have to dig into my savings regularly so just leaving it and hoping that things get better in 5 years time is not an option.

I guess I'll just continue transferring small chunks of it over whilst sobbing over the resulting amount I get in my US account.

Bermudashorts

Well if you need it you have to transfer it. I am not sure I understand the question anymore...

durham_lad

His question was if folks thought the pound might fall lower, because if it was heading lower, then he would transfer it all over in one lump rather than small amounts.

sherbert

Thanks Durham_lad (but Shertbert is a she ).

durham_lad

Oops, sorry about that.

BeerandChips

Well Sherbert, first I am definitely sobbing in the corner as I am transferring funds to pay for a house purchase. Having said that, I believe we still have a substantial downside to the rate of exchange and today the banks are fearmongering about transferring offices to other European countries so watch the money market tomorrow. Also other EU countries like Poland are digging in for a fight as they are more worried about the breakup of the Union than they are about short /medium term economic problems. So all in all I am transferring most money now and hedging a little by leaving the rest in Sterling.

mrken30

I felt exactly the same way in 2008/2009, it went from just over $2 down to $1.39 by the time I sold my house in 2009. However on the upside every dollar I have earnt since has been worth more in GBP.