Doing anything to protect savings during Brexit?

The_Green_Hornet

To protect my savings during Brexit I am going to keep ignoring the pearls of wisdom being given by all the self-appointed financial experts posting on here.

masonic

ZingPowZing said:

I hope that sketches some sort of rationale for currency movements around the points chosen 
(did someone mention whataboutery?) but, clearly, people are going to attribute different reasons for the same result. So, even if the conclusion of negotiations results in £ rising on a deal or crashing on no deal, some people are going say effect has another cause. 
Of course, any pair of currencies have other factors affecting their relationship. For example USA/China trade tensions impact on the five year chart above. That’s why it helps to isolate the impact of a factor like Brexit in all its variants. To me, there is nothing ambiguous about the way the currency trades on Brexit news. Being inside the single market is reckoned to be an economic advantage.
Don’t take my word for it though..let’s see how the FX markets react in the coming weeks.

Your comments do indeed sketch out a rationale for currency movements sometimes being correlated with Brexit events, and sometimes not, and sometimes inversely correlated. As you might expect, I disagree on a few points (that BoJo's withdrawal agreement removed the risk of 'no deal' - it made it more likely, that the UK has been impacted by Covid no worse than the rest of the world and that the vaccine is therefore not going to help the £ more than other currencies), but there is no point arguing over these.

The point in bold is exactly my point. People are going to attribute different reasons for currency movements and nobody knows who is right because the real causes cannot be proven. It is dangerous to become fixated on a single issue, such as Brexit, and ignore other factors. Of course Brexit has been influencing the value of the pound over the course of the past few years (as anything that could affect UK GDP and Government spending will have some effect), but so have other events and economic factors. Nobody knows the weightings of the various factors that have contributed to a particular change, people can only speculate.

[Deleted User]

masonic said:

ZingPowZing said:

I hope that sketches some sort of rationale for currency movements around the points chosen 
(did someone mention whataboutery?) but, clearly, people are going to attribute different reasons for the same result. So, even if the conclusion of negotiations results in £ rising on a deal or crashing on no deal, some people are going say effect has another cause. 
Of course, any pair of currencies have other factors affecting their relationship. For example USA/China trade tensions impact on the five year chart above. That’s why it helps to isolate the impact of a factor like Brexit in all its variants. To me, there is nothing ambiguous about the way the currency trades on Brexit news. Being inside the single market is reckoned to be an economic advantage.
Don’t take my word for it though..let’s see how the FX markets react in the coming weeks.

Your comments do indeed sketch out a rationale for currency movements sometimes being correlated with Brexit events, and sometimes not, and sometimes inversely correlated. As you might expect, I disagree on a few points (that BoJo's withdrawal agreement removed the risk of 'no deal' - it made it more likely, that the UK has been impacted by Covid no worse than the rest of the world and that the vaccine is therefore not going to help the £ more than other currencies), but there is no point arguing over these.

The point in bold is exactly my point. People are going to attribute different reasons for currency movements and nobody knows who is right because the real causes cannot be proven. It is dangerous to become fixated on a single issue, such as Brexit, and ignore other factors. Of course Brexit has been influencing the value of the pound over the course of the past few years (as anything that could affect UK GDP and Government spending will have some effect), but so have other events and economic factors. Nobody knows the weightings of the various factors that have contributed to a particular change, people can only speculate.

But you're not saying, are you, that if we leave with no deal, you don't know which way the market will go?
(the withdrawal agreement averted the prospect of crash brexit a year ago; positive for sterling)

masonic

ZingPowZing said:

masonic said:

ZingPowZing said:

I hope that sketches some sort of rationale for currency movements around the points chosen 
(did someone mention whataboutery?) but, clearly, people are going to attribute different reasons for the same result. So, even if the conclusion of negotiations results in £ rising on a deal or crashing on no deal, some people are going say effect has another cause. 
Of course, any pair of currencies have other factors affecting their relationship. For example USA/China trade tensions impact on the five year chart above. That’s why it helps to isolate the impact of a factor like Brexit in all its variants. To me, there is nothing ambiguous about the way the currency trades on Brexit news. Being inside the single market is reckoned to be an economic advantage.
Don’t take my word for it though..let’s see how the FX markets react in the coming weeks.

Your comments do indeed sketch out a rationale for currency movements sometimes being correlated with Brexit events, and sometimes not, and sometimes inversely correlated. As you might expect, I disagree on a few points (that BoJo's withdrawal agreement removed the risk of 'no deal' - it made it more likely, that the UK has been impacted by Covid no worse than the rest of the world and that the vaccine is therefore not going to help the £ more than other currencies), but there is no point arguing over these.

The point in bold is exactly my point. People are going to attribute different reasons for currency movements and nobody knows who is right because the real causes cannot be proven. It is dangerous to become fixated on a single issue, such as Brexit, and ignore other factors. Of course Brexit has been influencing the value of the pound over the course of the past few years (as anything that could affect UK GDP and Government spending will have some effect), but so have other events and economic factors. Nobody knows the weightings of the various factors that have contributed to a particular change, people can only speculate.

But you're not saying, are you, that if we leave with no deal, you don't know which way the market will go?
(the withdrawal agreement averted the prospect of crash brexit a year ago; positive for sterling)

I am saying that I don't know. I think the best case scenario is a fairly neutral reaction, with varying degrees of weakening dependent on what's already priced in (which nobody knows) and what else is going on at the time. I can't foresee any circumstances in which no deal could be overwhelmed by good news on another aspect of the economy, but I might just lack imagination. At this point the likelihood of the UK not crashing out for a period of time from early January is extremely slim IMHO, but the door is never closed to a deal, and markets are future looking, so what happens for a brief period of time is not going to be very significant over the long term. I don't believe either side is willing to walk away from negotiations, even if they continue into the new year, and if they do walk away, it won't be for long. All of that is just speculation though.

Sailtheworld

Messy no deal brexit sterling falls. Extension to transition or a deal agreed and sterling rises. It's obvious. What it does three weeks later is a different matter.

Currently business is unprepared for brexit. Shipments of a lot of foods will need EU health certificates to enter NI from 01/01/21 - there's a shortage of vets to carry out inspections and signing of certificates. Not to worry; there's an authorised trader scheme for supermarkets and their trusted suppliers which will waive many requirements until March 2021 - DEFRA invites to the scheme went out this morning - they hope to have a list by 31/12/2020. Entry points into NI have increased staff but, as yet, none of the entry points are registered as EU entry points.

Meanwhile fruit & veg is rotting in Calais. There were already queues (stockpiling) but Boris catastrophising about the new (since September) covid strain as cover for the Christmas U turn has, not surprisingly, led to the closure of borders.

Goods are struggling to both arrive & leave.

I know a lot of retired folk on these forums think it's all very simple but I think they're a long time out of the workplace.

I've stockpiled lime juice just so I can avoid scurvy.

masonic

Sailtheworld said:

Meanwhile fruit & veg is rotting in Calais. There were already queues (stockpiling) but Boris catastrophising about the new (since September) covid strain as cover for the Christmas U turn has, not surprisingly, led to the closure of borders.

I'd have thought the effective closing off of the UK's main supply lines just before Christmas would have had an impact on Sterling this morning, but there is nothing discernable. While the FTSE250 has fallen fairly sharply. I'm still not convinced this currency speculation game is as easy as is being suggested.

ElephantBoy57

masonic said:

Of course Brexit has been influencing the value of the pound over the course of the past few years (as anything that could affect UK GDP and Government spending will have some effect), but so have other events and economic factors.

Its just like a climate sceptic claiming that because the UK had a cold winter in 2009/10 does not mean that the earth is not warming.

Of course there are various things influencing the pound, even Brexiteers believe there could be short term pain.

masonic

ElephantBoy57 said:

masonic said:

Of course Brexit has been influencing the value of the pound over the course of the past few years (as anything that could affect UK GDP and Government spending will have some effect), but so have other events and economic factors.

Its just like a climate sceptic claiming that because the UK had a cold winter in 2009/10 does not mean that the earth is not warming.

I've posted the 50 year graph and outlined the long-term trend, so that would make me the climate change advocate in this analogy. As it happens I agree with the statement "because the UK had a cold winter in 2009/10 does not mean that the earth is not warming", one too many nots perhaps?

ElephantBoy57 said:

Of course there are various things influencing the pound, even Brexiteers believe there could be short term pain.

As far as I'm aware, everyone in this discussion is agreeing there will be short term pain. What I'm questioning is whether the exchange rate of a currency pair is both correlated and synchronised with the realisation of that pain, and there are no other significant influences over it.

The reason I have come to doubt such things is that currency markets are driven by human beings, and I've come to see human-driven processes deliver many things I thought would be impossible in recent times.

[Deleted User]

masonic said:

ZingPowZing said:

masonic said:

ZingPowZing said:

I hope that sketches some sort of rationale for currency movements around the points chosen 
(did someone mention whataboutery?) but, clearly, people are going to attribute different reasons for the same result. So, even if the conclusion of negotiations results in £ rising on a deal or crashing on no deal, some people are going say effect has another cause. 
Of course, any pair of currencies have other factors affecting their relationship. For example USA/China trade tensions impact on the five year chart above. That’s why it helps to isolate the impact of a factor like Brexit in all its variants. To me, there is nothing ambiguous about the way the currency trades on Brexit news. Being inside the single market is reckoned to be an economic advantage.
Don’t take my word for it though..let’s see how the FX markets react in the coming weeks.

Your comments do indeed sketch out a rationale for currency movements sometimes being correlated with Brexit events, and sometimes not, and sometimes inversely correlated. As you might expect, I disagree on a few points (that BoJo's withdrawal agreement removed the risk of 'no deal' - it made it more likely, that the UK has been impacted by Covid no worse than the rest of the world and that the vaccine is therefore not going to help the £ more than other currencies), but there is no point arguing over these.

The point in bold is exactly my point. People are going to attribute different reasons for currency movements and nobody knows who is right because the real causes cannot be proven. It is dangerous to become fixated on a single issue, such as Brexit, and ignore other factors. Of course Brexit has been influencing the value of the pound over the course of the past few years (as anything that could affect UK GDP and Government spending will have some effect), but so have other events and economic factors. Nobody knows the weightings of the various factors that have contributed to a particular change, people can only speculate.

But you're not saying, are you, that if we leave with no deal, you don't know which way the market will go?
(the withdrawal agreement averted the prospect of crash brexit a year ago; positive for sterling)

I am saying that I don't know. I think the best case scenario is a fairly neutral reaction, with varying degrees of weakening dependent on what's already priced in (which nobody knows) and what else is going on at the time. I can't foresee any circumstances in which no deal could be overwhelmed by good news on another aspect of the economy, but I might just lack imagination. At this point the likelihood of the UK not crashing out for a period of time from early January is extremely slim IMHO, but the door is never closed to a deal, and markets are future looking, so what happens for a brief period of time is not going to be very significant over the long term. I don't believe either side is willing to walk away from negotiations, even if they continue into the new year, and if they do walk away, it won't be for long. All of that is just speculation though.

Fwiw, I think $1.33.4 (as I type) unsustainable given a "cosmetic" deal; and if it is to be no deal I reckon $1.20. The dollar should also rise against the EUR on no deal, since it is a lose/lose outcome, but not by so much. Then for GBP/EUR, I suppose parity.

You accommodate quite a wide range of expectation, masonic.
I think some of it implausible but, if no deal happens, we shall see in the event. 

Albermarle

Despite the various speculation above, the Pound's rise against the Euro following the announcement of a deal , has been surprisingly muted .
Only marginally up on the day/week  and pretty much at an average level if you look back over the last 3 months, and a bit down on a month ago.