MSE News: The pound hits €1.40, should you buy now for the summer?

Hodgie

I can remember getting both €1.58 and €1.01 for my pound. The latter hurt especially when it cost €16 for two beers in Paris.
I decided to go for one of Debenham's offers and got €1.37/£1.00 and I'm happy with this.
I realise that my Halifax and Nationwide credit cards will give me a slightly better rate but what I've bought is now cast in stone.
If the rate improves by the time I go on holiday, I'll spend on the credit cards, but if it worsens I'll use the cash.
It does mean though that the cash sits in my drawer at home not earning any of the incredible interest rates the UK banks and building societies are currently offering.
Please note: If I knew much about currency fluctuations I'd be writing this from my yacht in the Bahamas, not at my kitchen worktop.

Kernow666

i get asked the question about 20 times a day in my job as i sell currency
of course i dont know the answer so tend to say if you are happy with the price then buy it now , price up things where you are going and stick to it

NFH

MSE_Helen wrote: »

The pound has punched through the psychological €1.40 barrier today for the first time since 2007...

1.4000 is not a psychological barrier. 1.4000 is a GBP/EUR rate (GBP 1 = EUR 1.4000). The market doesn't trade it this way but as EUR/GBP, whereby EUR 1 = GBP 0.7185 (currently). Don't believe the British newspapers, which similarly quote it the wrong way around. Interesting, the BBC News channel in the UK incorrectly quotes it at GBP/EUR whereas BBC World quotes it correctly as EUR/GBP.

You can see live FX rates from the wholesale markets at http://www.truefx.com/

Psychological barriers have a significant influence in the wholesale markets. For example, if EUR/GBP plunges through 0.7000, then you can expect market players to push it down a lot further. However, if GBP/EUR (which the wholesale markets don't use) breaks through 1.4000, nobody notices because this is a EUR/GBP rate of 0.7142, which is not a significant psychological level.

lynnzal

In the least I think you should speak to someone that is FCA regulated to give such advice.

Also note that GBP is strengthening against many currencies (JPY, AUD, NZD) to name a small sample so it's not just a case of EUR weakness. There is also argument for a stronger USD.

Bottom line as mentioned in the original article is that if you are happy with the current rate compared to recent holidays, just go for it, enjoy your holiday and don't look at exchange rates until you need to!

lynnzal

NFH wrote: »

1.4000 is not a psychological barrier. 1.4000 is a GBP/EUR rate (GBP 1 = EUR 1.4000). The market doesn't trade it this way but as EUR/GBP, whereby EUR 1 = GBP 0.7185 (currently). Don't believe the British newspapers, which similarly quote it the wrong way around. Interesting, the BBC News channel in the UK incorrectly quotes it at GBP/EUR whereas BBC World quotes it correctly as EUR/GBP.

You can see live FX rates from the wholesale markets at http://www.truefx.com/

Psychological barriers have a significant influence in the wholesale markets. For example, if EUR/GBP plunges through 0.7000, then you can expect market players to push it down a lot further. However, if GBP/EUR (which the wholesale markets don't use) breaks through 1.4000, nobody notices because this is a EUR/GBP rate of 0.7142, which is not a significant psychological level.

Not strictly true as wholesale traders and corporate money managers that are old enough to remember the German Deutschmark often refer to GBPEUR rather than the market norm of EURGBP. indeed many largeUK/international high street names still convert in GBPEUR terms.

budgetflyer

But when we go to the post office we do not ask "can i have GBP 0.712 worth of Euro multiplied by 600 please for my upcoming trip to Shagaluff

NFH

lynnzal wrote: »

Not strictly true as wholesale traders and corporate money managers that are old enough to remember the German Deutschmark often refer to GBPEUR rather than the market norm of EURGBP.

These people are not influencing the market. Every market player who is big enough to influence the market will be looking only at EUR/GBP, for which 0.7000 is a psychological level. All wholesale liquidity venues use EUR/GBP. Even if a liquidity venue supports GBP/EUR, it has no liquidity; all the liquidity is in EUR/GBP.

NFH

budgetflyer wrote: »

But when we go to the post office we do not ask "can i have GBP 0.712 worth of Euro multiplied by 600 please for my upcoming trip to Shagaluff

No, you ask for EUR 600 and then tell you how much it will cost you in GBP. The Post Office might quote its rates as the inverted GBP/EUR currency pair, but transactions at bureaux de change don't influence the market.

brewerdave

For once, I have had a win -bought my euros a couple of weeks ago from Ramsdens online getting 1.3839 - went passed the shop yesterday and the rate is more like 1.315 !:T

onesixfive

What about buying Euro's now for a late Greece holiday ?
Is it safe ? or
Are Greece likely to be booted out of the Euro before the end of the holiday season ?