Best way to protect £50,000 - convert to Euros pre-Brexit?

bd10

You assume there's a free lunch to be had. The problem is this: GBP is terribly volatile at the moment, driven by headlines, tweeds, you name it, all around Brexit and trade talks. Impossible to predict which way any given day will go. Mind you, if a no-deal could see the Pound significantly lower. If you want an insurance policy, buy some GBP/USD puts at the CME. By doing so, you might already be hedging yourself by having a brokerage account in USD in the first place. The market is already pricing in a lot of volatility, so the premium you'd be paying would be not so cheap and time may not be your friend if next thing you know Boris cannot make his mind up and we end up with a 3 months extension (covid being used as cover story, not a bad one actually) and your puts expires worthless.

The question in my mind would be, what's the downside risk and how much am I willing to take? Say -10% from 1.33 (good Lord, it was 1.34 just yesterday...), that's be £5k but that depends how much I am spending abroad. Personally - and I am not qualified to to give investment advice - I'll be sleeping through this one way or the other. Am invested in funds and shares, that's plenty a hedge. Not perfect, but let's keep things in perspective. We had the equities market melt-down in March, little no-deal Brexit is not of the same scale. And trying to hedge in March would have been impossible: market was limit up/limit down at days, just ridiculous or rather insane. The problem I see is this: trying to second-guess the outcome of these trade talks may become one expensive "hedge", or rather no hedge at all.

Brexit is a side-story for me, I am more concerned about the aftermath of covid, corporate defaults, how will the banks cope, etc etc. That's of real concern to me. We haven't seen half of it, or Rishi's budget...

[Deleted User]

AT $1.33 I bet there is more downside than upside.

Thrugelmir

ZingPowZing said:

What are you talking about?
£ value is directly linked to how much U.K. aligns with EU. 
The less it aligns, the less £ is worth in the world. 
As had been evidenced every day since 23/06/16  by FX movements .

What was the rate back in 2012? 

[Deleted User]

Thrugelmir said:

ZingPowZing said:

What are you talking about?
£ value is directly linked to how much U.K. aligns with EU. 
The less it aligns, the less £ is worth in the world. 
As had been evidenced every day since 23/06/16  by FX movements .

What was the rate back in 2012? 

$1.57. But £ is not going back to there. And why 2012? 
How many times has Thrugelmir to be told that it is not a "count from here to here" exercise?
If it was, we could say that England were unbeaten on the football pitch since 1945.

DireEmblem

We don't have enough information to give an opinion.  Premium bonds without knowing any further information.

1) What is the purpose of the 50k, is this your first house deposit, in which case have you maximised your LISA allowance this year if you are between 18-40.

2) How soon could you potentially need the funds - this would determine where they could be put to maximise return vs risk exposure.

Thrugelmir

ZingPowZing said:

Thrugelmir said:

ZingPowZing said:

What are you talking about?
£ value is directly linked to how much U.K. aligns with EU. 
The less it aligns, the less £ is worth in the world. 
As had been evidenced every day since 23/06/16  by FX movements .

What was the rate back in 2012? 

$1.57. But £ is not going back to there. And why 2012? 
How many times has Thrugelmir to be told that it is not a "count from here to here" exercise?
If it was, we could say that England were unbeaten on the football pitch since 1945.

Trouble with keyboard warriors is that fingers work faster than their brains in a desperate attempt to belittle. The Eurozone doesn't use $........... 

Steve182

I think it's widely accepted that there is more potential downside for £ vs euro or $ in the event of a no deal Brexit than there is potential upside in the event of a deal (ie speculation is that it's either going to be no deal or bad deal) . Insurance markets have priced in higher premiums to protect £ from falling than vice versa. This is fact.

That doesn't mean all investors should bet on the outcome though. I have about 2% of my portfolio in a spread betting account which I use for a bit of interest and fun and I've bet a little on £ falling, but it's just a bit of a hobby. 

eskbanker

bd10 said:

The problem is this: GBP is terribly volatile at the moment, driven by headlines, tweeds, you name it, all around Brexit and trade talks.

Seems unlikely that traditional Scottish fabrics would have a massive impact on currency fluctuations....

Another_Saver

Steve182 said:

I think it's widely accepted that there is more potential downside for £ vs euro or $ in the event of a no deal Brexit than there is potential upside in the event of a deal (ie speculation is that it's either going to be no deal or bad deal) . Insurance markets have priced in higher premiums to protect £ from falling than vice versa. This is fact.

That doesn't mean all investors should bet on the outcome though. I have about 2% of my portfolio in a spread betting account which I use for a bit of interest and fun and I've bet a little on £ falling, but it's just a bit of a hobby. 

If that were true, currency prices would not be where they are now.

stevecruise

Without high jacking the thread. My partner and I are in a similar position on trying to preserve saving against the pound plummeting. Some time ago we made plans to buy a boat and sail the far east in retirement. Having identified a 100k yacht Covid delayed our plans to finalise the deal. Looks like next year at the earliest now and with the pound already dropping 1% today it puts our plans in real jeopardy. And one have any ideas how to protect 100k, well 99k now!