USD - GBP Exchange Rate & Sharesave

If you 'understand a lot financially', surely you can work out what you would get in sterling, at today's share price and exchange rate, if you were to sell one share today, received the market price in dollars, and exchanged those dollars into pounds sterling. And you know what you would have to pay in pounds sterling to buy one share, because you have said your purchase price per share is fixed in sterling. So, surely you can see what profit per share you stand to make at the current price and exchange rate?

Now try it again and assume a higher or lower exchange rate when selling the one share in dollars and converting the proceeds back to pounds. Do you make more pounds profit or less pounds profit? So, is a weak pound when you come to sell the dollar shares, a good thing or a bad thing?

If the pound remains weak, and the company remains valuable in dollar terms, the deal that has been struck to allow you to buy a fixed amount of shares for a fixed amount of GBP, will probably be a good one.

Effectively, some people will be paying a substantial amount of dollars to buy the shares on the open market. But as you have an agreed price in GBP to acquire the shares, and GBPs are not worth a lot of dollars, effectively you have an agreed price which will result in you handing over 'not a lot of dollars' for the shares. However, the shares can still be sold for a lot of dollars because they are still normal shares of the company and each share you buy for 'not a lot of dollars' is worth just as much as the shares on the open market that most people have to pay a lot of dollars for.

So, there is a clear profit in dollar terms. When sterling is weak, that clear profit in dollar terms is worth a lot of sterlings.

You buy them with a certain amount of sterling that is worth not many dollars, and you sell them for a lot of dollars. As the proceeds ('a lot of dollars') is worth more than the cost ('not many dollars'), it stands to reason that a profit has been made, hopefully quite a good multiple of cost. So the amount of sterling you get back will be worth more than the sterling you paid out, by that same ratio ('quite a good multiple of cost').

Of course, sterling might not remain weak, and the company might be worth less in dollars or sterling than it is today, so don't go counting your chickens etc.