Predictions in currency rates? Seeking advice please...

tolokati

Thanks for your help guys!

dmg24

You really need to take advice from an expert, any information given here is purely an opinion.

mpython

As dmg24 says, you'll only get opinions here.

My (limited) understanding of exchange rates is that they reflect what the market already thinks is happening & will happen - so unless you think you can predict the market better than the banks, you'll be unlikely to do better.

What you can do (& pay a % for) is either fix the exchange rate today, next week, next month or in 6 months. This gives you certainty of exchange rate for when you do your transaction but carries a risk that the exchange rate may move further than that at the fixed rate.

There is another part of the exchange market which is 'options' (nb this is the kind of thing that bankrupted barings bank under Nick Leeson), and as I understand it, it allows you to buy at a certain exchange rate but not commit (so its a one way bet). You can do options on both rising or falling exchange rates (but again you pay a % for this).

The only trend that seems likely for the next 12 months is continued (slow) decline of the dollar. Euro zone (inc UK) seems to be fairly stable - unless an energy crisis or some such other unforeseen event happens. Just my 2p worth.

tolokati

I know I could only get opinions but I know nothing about the topic so anything you could say about it would give me more knowledge about the topic!

Thanks again.

digerati

I expect the Pound will get weaker against the Euro as UK interest rates have been cut. If Euro rates are cut then you'll get a better fx rate into Euros from Pounds.

jamesd

The financial press seem to be consistent in taking the view that the Pound is going to fall further against the Euro as UK interest rates are reduced.

I'm choosing to invest outside the UK in part to exploit that trend.