Moving my pounds savings to foreign currency. Best options?

Sportacus

Wallstreet banks are predicting a falling pound, and I agree with them (see the story in the Telegraph today).  Looking to move my cash savings to US dollars instead of earning the paltry few % we can get in instant access savings accounts here.

What are the best options?  A google search turns up wise.com as the prevalent foreign currency account provider.

Voyager2002

Don't forget about the Fineco multi-currency account.

Frequentlyhere

Currency markets are highly efficient markets (even more efficient than stock markets). If the Daily Telegraph was really confident in their assertions, they could make billions themselves in leveraged spread bets. That they won't do that should tell you something. Meanwhile if you believe 'Wall St' would let you in on something that would detract from their profit, well, watch some more movies about Wall St.

Whilst I'm sure there's logic in their reasoning,  that's already priced in to that GBPUSD price. GBPUSD is already 10% down year-on-year so this is probably some classic newspaper "it fell, it must keep falling / it's rising, it's going to the moon!" logic.

All that said.....if you use revolut you can transfer £1000 a month totally fee free if thats of any use.

The other reason you really don't want to bother doing this is that you'll find it very difficult to earn interest on those dollars. Meanwhile you can get 2.38% for a 1 year fix here.

So if you're txfering £10k, then you're going to pay commission and lose out on £238 on top, and then it's a total punt on whether it'll rise or fall from here.

If I had to bet personally I'd bet in the opposite direction simply because the rate has recently fallen so much. But I'm not going to bet as it's a fools errand.

diystarter7

It's a gamble. If "Wall street" pundits were 100% certain they'd bet the world on their predicition but as we know things do not always go to plan.

Consider the commission changing into other money and then back to pounds and the spread of the two currencies.

Is there not an easier way to gamble foreign currency via stock markets? The market makers play with hundreds of millions and even a single point up or down makes or loses them millions at times.

Frequentlyhere

diystarter7 said:

It's a gamble. If "Wall street" pundits were 100% certain they'd bet the world on their predicition but as we know things do not always go to plan.

Consider the commission changing into other money and then back to pounds and the spread of the two currencies.

Is there not an easier way to gamble foreign currency via stock markets? The market makers play with hundreds of millions and even a single point up or down makes or loses them millions at times.

One could go the whole hog and open an FX trading account. You know, the ones with the banner on the homepage saying that nearly everyone loses money.

edit: on reflection, @diystarter7 is right. If you actually want some exposure to the benefit of a falling £, at least do so by investing in a sensible global tracker fund (e.g. VWRL). That too will rise if the £ continues to fall, and in the long term will rise anyway far in excess of what you can do with cash.

diystarter7

Frequentlyhere said:

diystarter7 said:

It's a gamble. If "Wall street" pundits were 100% certain they'd bet the world on their predicition but as we know things do not always go to plan.

Consider the commission changing into other money and then back to pounds and the spread of the two currencies.

Is there not an easier way to gamble foreign currency via stock markets? The market makers play with hundreds of millions and even a single point up or down makes or loses them millions at times.

One could go the whole hog and open an FX trading account. You know, the ones with the banner on the homepage saying that nearly everyone loses money.

As I said, market makers make/lose millions at times - so what does that tell you if you gamble or gamble in anyhting?

bd10

Instead of literally moving GBP to a USD account, I'd do that with a short term US TBill/money market fund. Few prerequisites: (1) Obviously, it should be liquid to buy/sell as ETF or available on most platforms incl ISA/SIPP wrappers. No point to pay lots of transaction costs as currencies don't fluctuate that much. (2) The fund should have a very low duration, i.e. a low as possible sensitivity to interest rate changes. The Fed started the hiking cycle and the longer the duration, the more sensitive the T-Bills/money market instruments react to rate changes (rising rates -> falling bond prices). Ideally, the underlyings should be floating rate, so the investor benefits from rising rates when the short term papers readjust for higher interest rates on a quarterly basis. (3) The fund should do all the FX hedging for you.

This leaves you with a de-facto USD denominated money market account, part-taking in rising rates and gains should GBP depreciate against USD.

Have a look at IBTS.L: "USD Treasury Bond 1-3yr UCITS ETF Dist" for example. Duration just shy of 2 years (so if interest rates rise by 100bp, fund would fall 2% (all else being equal)). Not quite sure whether there's much floating rate inside, you'd have to check the prospectus. However, at the costs of a share trade/ETF plus bid/ask spread, you could convert the whole lot at once without the hassle of going through banks/FX shops.

Just an idea.

bostonerimus

The pound has already fallen quite a bit and predicting it's direction against the dollar os a fool's errand. You spend pounds so keep your money in pounds, currency speculation should be avoided as it is an easy way to lose money.

Sportacus

Thanks all, sounds more sensible to diversify then go all in on one currency.  I don’t agree with “you spend pounds so keep your money in pounds” because that’s also having all eggs in one basket like putting all in dollars.  I’m not convinced our current  government who have a prime minister that literally said ‘f. business’ is fully priced in to the value of the pound.  Unlike all other economies we’ve erected trade barriers around ourselves which is going to stymie growth for years.  

Albermarle

Seems to be forgotten that apart from the Dollar, there are two other major traded currencies .
The Pound has been reasonably stable against the Euro over the last 12 months, and is up against the Yen over the same period.

bd10

Bit undecided on Euro. War, hesitant ECB, recession risks all weighing on the currency, yes ECB might turn it around but hmm. On JPY, well, it remains a funding currency for carry trades, even as safe haven (CHF aside) was not proven when Ukraine got invaded. Problem with USD as best best - not a bad one at all - is that if the market gets overly long Dollar, it'll snap back from extremes, so for example I wouldn't fancy going long when Dollar index is at muti-year highs etc. We're off the highs, so maybe ...