The Lemon Fool

Hello,

I've got a few tens of thousands in sterling sitting in a deposit account. Is there an easy way and quick way to put this into either dollars or euros, otherwise reduce my exposure to the pound? (I'm in the UK by the way.)

gletoms wrote:Hello,

I've got a few tens of thousands in sterling sitting in a deposit account. Is there an easy way and quick way to put this into either dollars or euros, otherwise reduce my exposure to the pound? (I'm in the UK by the way.)

Won't any of the banks give you a foreign currency account? I used to have a dollar account when most of my income was in dollars. Though I wouldn't consider that in any sense an investment strategy.

Otherwise, any investment tied to your target currency. Lowest risk - and good liquidity - would perhaps be a conservatively-managed bond fund.

gletoms wrote:I've got a few tens of thousands in sterling sitting in a deposit account. Is there an easy way and quick way to put this into either dollars or euros, otherwise reduce my exposure to the pound? (I'm in the UK by the way.)

Hmm, your pounds have already lost value relative to these currencies, and are sitting very low compared to the last few years. Possibly not the best time to sell them.

Unless of course you think the pound has a lot further to fall...

Scott.

I have no more knowledge about the direction of the pound than the next man, and he knows very little. However, FWIW I am targeting a re-entry when/if the pound hits 1.1 USD.

I am of the opinion that Brexit will definitely be a hard Brexit with a relatively slow, though jerky, further depreciation of the pound. It could even be a shambolic Brexit. This is a possibility and I wouldn't be without cash on standby just in case this happens.

It is noteworthy that recent polls show that 40% of the population, IIRC, think they will be unaffected financially by Brexit despite the available evidence such as currency depreciation. This will definitely change as reality hits but the big unanswerable question is what reality will be like.

None of the above actually answers your question so sorry for that. I don't have too much cash in GBP as I am, at least for 3 months more, non-resident. If I were you I would buy a world based ETF such as VWRD or a Vanguard Life Strategy 80/20 fund. This assumes you will not need the cash for a few years.

As a general rule markets dislike uncertainty. This means they often err on the side of caution and the falls in the pound may at least partially reverse regardless of the outcome of Brexit (excepting obviously a melt-down of the UK economy!). I would therefore be inclined to stay in Sterling.

Note to raptor - staying in or moving out of Sterling seems a reasonable topic for an investment board, no?

BofE

Bubblesofearth wrote:As a general rule markets dislike uncertainty. This means they often err on the side of caution and the falls in the pound may at least partially reverse regardless of the outcome of Brexit (excepting obviously a melt-down of the UK economy!). I would therefore be inclined to stay in Sterling.

Note to raptor - staying in or moving out of Sterling seems a reasonable topic for an investment board, no?

BofE

No problem with that as a strategy but the OP posted:-

gletoms wrote:Hello,

I've got a few tens of thousands in sterling sitting in a deposit account. Is there an easy way and quick way to put this into either dollars or euros, otherwise reduce my exposure to the pound? (I'm in the UK by the way.)

Which is a "how to" question and not a strategy. If posters want to discuss the relative merit of switching as a strategy then fine, but if it stays as a "how to" then it will be removed,

Raptor.

No problem with that as a strategy but the OP posted:-

gletoms wrote:Hello,

I've got a few tens of thousands in sterling sitting in a deposit account. Is there an easy way and quick way to put this into either dollars or euros, otherwise reduce my exposure to the pound? (I'm in the UK by the way.)

Which is a "how to" question and not a strategy. If posters want to discuss the relative merit of switching as a strategy then fine, but if it stays as a "how to" then it will be removed,

Raptor.

Raptor,

Up to you how you want to moderate and, as I'm not prepared to take on the task myself, I shall abide by your decisions. All I would suggest is keep it light if at all possible which IMO would include a lot of flexibility as to what is on or off topic. Encouraging discussion is maybe more important than constraining it and given the thread has evolved into a debate about the merits of Sterling it would seem to have become strategic?

Heavier moderation of course with ad hominem attacks and insults.

Just my tuppence.

BofE

I find myself in the position of having changed US$ into pounds after Brexit at 1.36 and of now regretting my actions - although it wasn't the only investment decision I regret from 2016.
So now I I have no idea whether I should protect myself from a further fall in the pound or stick it out and hope the pound strengthens - lately it seems my best investing strategy has been to sit on my hands and to not do anything.
To the original OP, if you have a brokerage account then you should get better exchange rates for transferring currency. I would think twice before buying Euros though - 2017 could be a very volatile year for Europe and the Euro. Oh to have a crystal ball !

gletoms wrote:Hello,

I've got a few tens of thousands in sterling sitting in a deposit account. Is there an easy way and quick way to put this into either dollars or euros, otherwise reduce my exposure to the pound? (I'm in the UK by the way.)

Short duration bonds are a proxy for cash. I use an iShares ETF for USD Treasury Bonds, ticker IBTS (0-3yr duration). I've not looked how closely it tracks USD, but appears to be good enough. They also have an EUR one, though I don't know the name/ticker (Think it was a 0-1yr duration from memory). Advantage with these is that there's no FX fees as they're quoted in GBP.

- Ox3F

Sorry probably a bit late this information but I am doing a lot of fiddling between euros and £s just now and I have a euro account with a UK bank and a currency broker who I use for the exchanges. You can even use a broker and not take the money out of their account and therefore negate the need for a euro account. Make sure you get one covered incase they go bust mine has the money in a separate account.

youfoolishboy wrote:Sorry probably a bit late this information but I am doing a lot of fiddling between euros and £s just now and I have a euro account with a UK bank and a currency broker who I use for the exchanges. You can even use a broker and not take the money out of their account and therefore negate the need for a euro account. Make sure you get one covered incase they go bust mine has the money in a separate account.

That is sort of the situation I have now although none of my money sits with the broker for any prolonged period.

For clarity;

I have a currency account (denominated in Euros) with my main UK bank. There is no fee for holding a currency account and relatively small fees for transferring money out to an account not under their umbrella.

I have a separate Euro account with a Spanish bank which I set-up last year. This was set-up while I was over in Spain and with the benefit of a English speaking Spanish based solicitor who got me sorted within a couple of hours of meeting them at their local bank (which has branches throughout Spain). It also has no fee (subject to a minimum monthly deposit).

I use a currency broker to do the transfers as the rates were significantly better than the banks. When I last looked the difference was about 1.5% which in my mind is worth the 2 or 3 days that the money is out of one of my accounts but nor received in the other.

Cheers,
0inK

If I was wanting to take a position to protect against £ weakness I would do so by holding US dollars (or possibly Swiss francs), but not by holding Euros. I expect continuing Euro weakness, partly because of Brexit uncertainties for the EU, also other EU countries considering an exit from the EU., and the other political and fiscal uncertainties hanging over the EU., (including various countries' elections).

I am currently sitting on some US dollars for the above reasons. The preferred time to have taken such steps would of course been prior to last June.

TahiPanas wrote:It is noteworthy that recent polls show that 40% of the population, IIRC, think they will be unaffected financially by Brexit despite the available evidence such as currency depreciation. This will definitely change as reality hits but the big unanswerable question is what reality will be like.

I am certainly in the camp of "Brexit won't make much difference to me". I wasn't strongly either in favour of it or against it, and I like to think that my investments won't change much either - what I lose in sterling I will gain in the value of shares with overseas earnings. Most share portfolios are self-hedging, and low interest rates mean that people don't tend to hold large cash positions in sterling. If you hold a lot of gilts or corporate bonds, however, it might be ugly.

The only risk I see is political. Both the major parties have made such a hash of this that we might yet see a constitutional crisis. Ditto for the US given the wild card that is Trump. Some gold, perhaps?

Lootman wrote:

TahiPanas wrote:It is noteworthy that recent polls show that 40% of the population, IIRC, think they will be unaffected financially by Brexit despite the available evidence such as currency depreciation. This will definitely change as reality hits but the big unanswerable question is what reality will be like.

I am certainly in the camp of "Brexit won't make much difference to me". I wasn't strongly either in favour of it or against it, and I like to think that my investments won't change much either - what I lose in sterling I will gain in the value of shares with overseas earnings. Most share portfolios are self-hedging, and low interest rates mean that people don't tend to hold large cash positions in sterling. If you hold a lot of gilts or corporate bonds, however, it might be ugly.

The only risk I see is political. Both the major parties have made such a hash of this that we might yet see a constitutional crisis. Ditto for the US given the wild card that is Trump. Some gold, perhaps?

That's interesting, and I take the point about most portfolios being hedged to some extent. However, could I ask you to expand a little on how you see the potential for downside risk on corporate bonds, please?
Thank you.

mswjr wrote:That's interesting, and I take the point about most portfolios being hedged to some extent. However, could I ask you to expand a little on how you see the potential for downside risk on corporate bonds, please? Thank you.

I wasn't so much making predictions about them as commenting that people with a large UK bond portfolio will have suffered more from a decline in sterling than those invested in shares. Those with overseas bond holdings will have done well. Fixed income investments tend to correlate more to currency than shares - as an example Swiss bonds have performed well despite yielding nothing or even less than nothing.

But I think that most of the decline in sterling has been done now so it's too late to try and profit from that. Interest rates have started to creep up and, medium term, that might be a bigger negative for bonds everywhere.

I have about 3% of my portfolio in bonds so it's not a big deal for me either way. Nor is Brexit. A well designed portfolio should be able to withstand such things. My bigger worry is constitutional chaos, civil disruption and other forms of political risk. Harder to hedge those kinds of things, except by relocating.

Thanks very much indeed.

Might not be a good idea to move out of the Pound now. It would have been a couple of years ago. It is now oversold.

Yes. I'm in the antipodes and I have a sizeable GBP amount in the UK. No way am I moving it until it gets back to it's longer term average of around $2 AUD.

The boat has sailed, but I think it's making a turn.