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Brexit deal currency movements

Another nice start to the day with our global investments up around 1% to achieve new highs but does anyone else have the feeling of impending doom that we might just be about to agree a brexit deal and the pound will shoot up to 1.40 USD or higher? How far to go down in a no deal scenario maybe 1.15 USD? Last week I hedged my risk a little bit by taking on some UK bias (which has gone down so far today).
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  • MaxiRobriguez
    MaxiRobriguez Posts: 1,780 Forumite
    1,000 Posts Fourth Anniversary Name Dropper
    edited 7 December 2020 at 9:24AM
    With the prospect of a pivot to a UK-US trade deal after no deal exit with EU now seemingly dead, it would take a serious amount of cojones for us to not secure a deal from here. I can't see anything else than a red, white a blue surrender deal. We'll push it to the wire to try and secure as much as possible but ultimately when it comes to the final hurdle we'll take whatever is on the table.

    It may push GBP higher but I'm not convinced it will sky rocket. It's going to be a light tough, bad deal for the UK. It's better than no deal but.... 


  • I predict it is unpredictable. Keep calm and carry on.
  • Most interesting for me will be to see the impact of passive index investing on price movements. I do wonder if the "GBP up, FTSE 100 down" assumption is going to be broken if we do get a deal, with both rising in tandem.
  • Alexland
    Alexland Posts: 9,804 Forumite
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    edited 7 December 2020 at 10:17AM
    Most interesting for me will be to see the impact of passive index investing on price movements. I do wonder if the "GBP up, FTSE 100 down" assumption is going to be broken if we do get a deal, with both rising in tandem.
    Yes a deal still seems to be mostly priced in to the exchange rate so it seems like there is little currency upside potential and a lot more downside under no deal. I'm guesstimating our unhedged global investments would fall maybe 5% in a deal scenario and maybe gain 20% under a no deal scenario. UK equities might go up around 15% in a good deal scenario which could be an opportunity to offset that decline in global equities however I haven't gone heavy enough into the UK to fully offset the decline. The valuations in the UK market are looking very attractive (particularly for those seeking income) and I agree both the currency and UK shares could go up (or down) at the same time.
  • Another_Saver
    Another_Saver Posts: 530 Forumite
    500 Posts Name Dropper
    edited 7 December 2020 at 10:32AM
    I hope it breaks that stupid assumption because it's a false myth anyway, hmph
  • VXman
    VXman Posts: 590 Forumite
    Fifth Anniversary 500 Posts Name Dropper
    I have money sitting in a bank account in Hong Kong. I'm waiting for the HKD/GBP to improve so I can bring that money home. HKD is pegged to the USD and the last time it was any good for me was back in August. Hoping Brexit might help out!
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
    10,000 Posts Fifth Anniversary Name Dropper Photogenic
    Alexland said:
    Another nice start to the day with our global investments up around 1% to achieve new highs but does anyone else have the feeling of impending doom that we might just be about to agree a brexit deal and the pound will shoot up to 1.40 USD or higher? How far to go down in a no deal scenario maybe 1.15 USD? Last week I hedged my risk a little bit by taking on some UK bias (which has gone down so far today).

    Its a mugs game trying to double guess the exchange rate. Too many moving parts.
  • Alexland
    Alexland Posts: 9,804 Forumite
    Seventh Anniversary 1,000 Posts Photogenic Name Dropper
    Its a mugs game trying to double guess the exchange rate. Too many moving parts.
    I'd agree with you for the majority of the time but it seems likely that this one issue has the potential to cause a sharp movement in one direction or the other in the next few days which makes it interesting. I'm not looking to profit from the situation but find the right balance to manage the risk of potential outcomes.
  • Alexland said:
    Its a mugs game trying to double guess the exchange rate. Too many moving parts.
    I'd agree with you for the majority of the time but it seems likely that this one issue has the potential to cause a sharp movement in one direction or the other in the next few days which makes it interesting. I'm not looking to profit from the situation but find the right balance to manage the risk of potential outcomes.

    If you are a long term investor, why bother managing anything that has a short term binary impact?  Its probably swings and roundabouts in the long term.
  • I hope it breaks that stupid assumption because it's a false myth anyway, hmph
    This one's a bit different though to the average trading day, what with a long term, very large impact on the economy either way in the balance and to be decided within days. Anyone claiming certainty on what will happen is a bit of a mug. 
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