Brexit vote panic with life savings advice needed .

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klmeer
klmeer Posts: 9 Forumite
in Savings & investments
Not sue if this is the right place to post but anyway ...
After Brexit vote I panicked and sent all my savings in GBP UK bank to a foreign bank 50K with a 6 % a year fixed .
Now it seems the pound is recovering and wonder should I send it back to the UK . I really need GBP not USD . I know it was a foolish move and Ive lost 5k pounds already .I have little idea about money markets but should I accept my mistake and hold out for a year hoping the pound will lose value to the dollar or get it back into a UK bank now .?
Thank you for your advice .
Its my life savings and my job is low earning so its already a massive blow to me .
Regards
«1345

Comments

  • Ballard
    Ballard Posts: 2,850 Forumite
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    You haven't been completely clear here.

    Have you converted GBP to USD and sent it overseas?

    What sort of product have you used to get 6% interest for a year? Is it some form of derivative?

    You've recognised that it was a foolish trade but you need to work out what the costs would be to unwind it and then decide whether you would feel comfortable getting out and receiving your cash back.

    Unfortunately no one on here (or elsewhere) can give any indication of the whereabouts of exchange rates in a week's time let alone 11 months so we can't help on that score.
    I hate verisimilitude.
  • klmeer
    klmeer Posts: 9 Forumite
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    Thanks
    Yes GBP to USD in a foreign bank 6% fixed for 1 year . I guess the question is where the GBP will be against the USD in a years time .
    Any idea where to get an indication of that ?
  • Ballard
    Ballard Posts: 2,850 Forumite
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    klmeer wrote: »
    Thanks
    Yes GBP to USD in a foreign bank 6% fixed for 1 year . I guess the question is where the GBP will be against the USD in a years time .
    Any idea where to get an indication of that ?

    There's no way of getting any indication of the exchange rate. That's impossible I'm afraid.

    USD interest rates aren't much different to GBP at the moment so I'm baffled as to how you've got 6%. I don't see how it can be a straightforward deposit.
    I hate verisimilitude.
  • Ballard
    Ballard Posts: 2,850 Forumite
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    One thing that I haven't mentioned is that banks do trade forward foreign exchange so there will be an exchange rate for 12 months time available now.

    This is not an indication of where banks think the exchange rate will be next year as it is based solely on the difference in interest rates between the two currencies.

    Depending on who your cash it with they MAY agree to buy your USD and re-sell you GBP at an agreed rate upon maturity of your deposit. This would mean crystallising your loss and you'd have to forego any hope of the rates going in your favour but you would at least know where you stand.

    I'm still concerned why you're getting 6%. That's just too high for a standard deposit.
    I hate verisimilitude.
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    edited 14 September 2016 at 9:12AM
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    Over the next two or so years IMNSHO it's quite likely that the Sterlimg to USD rate will fluctuate significantly in both directions quite abruptly as different events occur on the road towards Brexit. There will be stories that will cause it to jump violently one way or the other as people overreact towards both favourable and non favourable events, plus overall there is the prospect of US interest rates rising slightly which will strengthen the Dollar. Little prospect of UK rates rising.

    So in general I'd expect the Pound to get weaker so waiting is in your favour but there's no way to be sure. If you have the ability to wait, then I'd say wait until US interest rates have risen once or twice and the next panic headline about Brexit causes a 2 or 3% decline in a day and then bring it back. You'll still lose money when you do that which will also wipe out some of those gains. If I was to make a wild stab in the dark, then I'd say you might get a 5% better rate in a years time, which will cancel out the exchange rate loss of transferring it back.

    And, it's always possible that some event will occur which will make the dollar plunge or the pound soar and completely wipe out any such gains you've made and my forecast look utterly stupid.

    You've essentially become a currency speculator with all the risks that implies. There are no guarantees other than, if you bring it back now you'll know exactly what you lost.
  • JohnRo
    JohnRo Posts: 2,887 Forumite
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    edited 14 September 2016 at 12:26PM
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    Stop panicking. I personally wouldn't be losing sleep over short term currency fluctuations holding USD vs. GBP. The immediate problem you have is if you need the money now, in GBP.

    Once brexit does start to happen for real and all this phoney politicking and 'brexit means brexit' bluster is put to the sword I don't see how GB or GBP will do well, relatively.

    Problem is that process will almost certainly take many years, with twists along the way, so measuring and understanding the consequences will take even longer.

    For all it's many faults the US and it's currency are a far more stable prospect longer term imo.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
  • jimjames
    jimjames Posts: 17,619 Forumite
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    Where is this foreign bank? Presumably not in the USA if the rate is 6%?
    Remember the saying: if it looks too good to be true it almost certainly is.
  • veryintrigued
    veryintrigued Posts: 3,843 Forumite
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    This is probably just one of many examples of peoples hysteria listening to 'experts' that many on this very forum were quoting.

    I do hope its a lesson learned.

    I see the jobs market looks steady too:

    http://www.bbc.co.uk/news/business-37360153
  • Ballard
    Ballard Posts: 2,850 Forumite
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    veryintrigued wrote: »
    This is probably just one of many examples of peoples hysteria listening to 'experts' that many on this very forum were quoting.

    I do hope its a lesson learned.

    I see the jobs market looks steady too:

    http://www.bbc.co.uk/news/business-37360153

    That's true. We've left Europe and everything's fine.
    I hate verisimilitude.
  • jimjames
    jimjames Posts: 17,619 Forumite
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    veryintrigued wrote: »
    This is probably just one of many examples of peoples hysteria listening to 'experts' that many on this very forum were quoting.
    I don't recall anything suggesting that savings should be moved abroad.
    The fact that nothing has yet happened means it's not really surprising that little effect has yet been seen. Wait till hard Brexit happens and I'd expect a very different picture
    Remember the saying: if it looks too good to be true it almost certainly is.
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