Moving my pounds savings to foreign currency. Best options?

bd10

Banks are very good at predicting the past, or at least change to stay in tune with current direction of travel. That's FX sales for you. If a sales desk is swimming against the current for too long, its clients will not be overly happy. So I'd take their view with a big pinch of salt.

Banks usually trade the order flow but it's hedge funds doing the speculation. At the moment they're marginally buying GBP vs USD.

As for Boris' tribulations, the thing that would weigh on the Pound would be for example a vote of no confidence with leadership election. That's just a risk-off move: don't like uncertainty, so as some bank even labelled the Pound an emerging market currency (bit harsh but I see where they're coming from), so then that's bad for GBP. The whole eff-business and economic consequences of Brexit will feed through but more through GDP, trade stats etc, too early for that now.

[Deleted User]

Thing is, I lived in Argentina for a while and I see scary parallels with our government now: populist, corrupt, and economically illiterate.  No one in Argentina keeps their money in pesos for a moment longer than  necessary, even buying a car is a better place to put your money than keeping it in cash.  I fear the level of what is acceptable for our PM and government to do has been reset now, our top selling papers still supporting them.  We won’t get back to being a stable and respected country any time soon, if ever, the U.K. might even break up.  But if I’m wrong I can be pleasantly surprised.  I would take the hit on my dollars being worth less pounds if it also meant a better economic outlook for our country - and maybe even getting my freedom of movement back.

bd10

[Deleted User] said:

Thing is, I lived in Argentina for a while and I see scary parallels with our government now: populist, corrupt, and economically illiterate.  No one in Argentina keeps their money in pesos for a moment longer than  necessary, even buying a car is a better place to put your money than keeping it in cash.  I fear the level of what is acceptable for our PM and government to do has been reset now, our top selling papers still supporting them.  We won’t get back to being a stable and respected country any time soon, if ever, the U.K. might even break up.  But if I’m wrong I can be pleasantly surprised.  I would take the hit on my dollars being worth less pounds if it also meant a better economic outlook for our country - and maybe even getting my freedom of movement back.

I know exactly what you mean. If you have your domestic currency depreciate against all the others, even if you never travel your wealth gets eroded in relative terms, be it through higher import prices or more expensive holidays abroad etc. The next thing we face post pandemic (WHO hasn't declared it over, but we're past the worst - fingers crossed) is disrupted supply chains, excessive monetary stimulus which manifests itself in the 9% y/y inflation.

UK politics is not helping to instill investors' confidence. Having said that, UK large caps are a relatively more attractive as they are heaving on mining/minerals/energy even financials vs US tech is gets decimated. The FTS100 has been holding pretty neatly at least in comparative terms. Should this continue, this should give the Pound some support to some degree.

In relative terms we could be worse of by holding Euros, lol. Not a pretty place to be. Lagarde is so way behind the curve. Well, not saying BoE is any better with Bailey having almost declared defeat.

My strategy is to remain globally invested, so my currency exposure is limited. Even in June 2016, the global funds I held at the time all appreciated, proving an effective FX hedge. Right now I hold a small proportion of cash but that's just on hold for getting invested again. If I would be of the opinion of not wanting to be invested and having little confidence in GBP, then I'd switch it to floating rate funds in USD or other currencies, see post above.

Even if one reduces currency risks by being globally invested, that then leads to the question of asset allocation in light of inflation, which imho will be with us at elevated levels for quite some time. Not necessarily at 9% y/y but just 3-4% y/y for 3-5 years erodes wealth by 15% due to compounding. That's pretty significant. So, you need to combine our asset allocation strategy with GBP strategy.