Betting against the pound

meester

Any idea the best way to do this?

I have substantial savings and am fed up with their continual loss of purchasing power when I go on holiday (which is about five times per year).

The bottom line is the pound in our pockets has lost considerable value already. If I wanted to risk say £1-£2,000 on GBPUSD trades what be the best way? I see this as a hedge - if the pound goes down further, eroding my savings even more, I will have some compensation for it.

I guess a good amount for me to preserve the foreign currency value of would be £50k. I don't want margin calls or high costs.

omelette451

Some UK banks, such as HSBC, offer accounts in euros and dollars. I don't know much about them so don't know if they're any use to you, but it's worth investigating.

Do you really think there's potential for the euro to rise even higher against the pound? I'm not trying to put doubts in your mind, I'm just curious as, like I said, I know little about such things...

malik999

At low levels currency is not a option/the way to go. you wont make any money. buy and sell rates are very different thus you need a huge amount of movement to get any type of profit. you then have to pay tax on that profit. its also very high risk.

tradetime

First up, you have far too much holiday time, how do you expect to save money if you're off gadding about on holiday all the time?

On a serious note, cut one holiday a year, the money saved on that should more than enough cover the current loss of purchasing power. When you start messing about with currency speculation with a view to hedging something like this it'll likely be more trouble than it's worth, for the sakes of a holiday, I dunno, but I'm guessing you can't want to hedge more than about a grand a trip, do you want to hedge 5 trips all at once, or just hedge in between trips, what happens if the pound does a big oversold rally, where are you then?
Hedging sounds like the "thing" to be doing, but quite frankly unless you're hedging large sums, I'd say it's more trouble than it's worth, and not cost effective, sorry.

I guess a good amount for me to preserve the foreign currency value of would be £50k. I don't want margin calls or high costs.

Don't really understand this part of your post

purch

I have substantial savings and am fed up with their continual loss of purchasing power when I go on holiday (which is about five times per year).

Continual loss ??

Were you complaining when GBP was strong and getting stronger against the USD and/or EUR ??

It's fallen in the last few months and you're calling it 'continual' ??

purch

I see this as a hedge - if the pound goes down further, eroding my savings even more, I will have some compensation for it.

And if/when GBP get's stronger your hedge will lose you money, and you'll be back on here bemoaning your luck.

hermante

Just keep large sums of cash in several currencies and buy more of one when it gets cheap, i.e. a few weeks ago was the time to buy pounds with your euros. If you're going to be USING the foreign currencies 5 times a year then I don't know why you haven't been doing this already.

opinions4u

Currencies rise.

Currencies fall.

While short term this can be a pain in the rear, were you partying on the extra purchasing power the £ had against the $ until the middle of last year?

You are comparing short term fluctuations rather than medium term trends.

For what it's worth, I think the £ will strengthen against the euro and will hold its own against the $ over the coming months.

arcadia00

meester wrote: »

Any idea the best way to do this?

Not saying it's best, but spread betting would be a quick and easy way to achieve your stated intent.

Broadback

If you have planned your holidays then it might be worth buying your spending money now. Of course it may go down in value, anyway depending where you go some currencies have done a lot worse than ours!