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Buy sterling now?

  • 04-12-2008 12:24pm
    #1
    xabi
    Registered Users, Registered Users 2 Posts: 3,020 ✭✭✭


    I recently sold my car and plan on going to the UK in the new year to pick another up. Would it be advisable for me to put the cash into sterling now as the rate is so good? Or is it likely to remain around this level for a a while?

    Thanks,

    X.


Comments

  • #2
    marathonic
    Registered Users, Registered Users 2 Posts: 1,684 ✭✭✭marathonic


    Noone knows for sure. FX rates go up and down based on multiple factors, none of which are easily predictable.

    Today, for example, the UK decreased interest rates by 1%. The ECB are expected to cut around 0.5% - 0.75%. This is currently priced into the rate. However, if the ECB decided that inflation no longer poses a threat and decreased rates by 1.5% (like the UK done last month), sterling would get stronger. Likewise, if they only reduced by 0.25%, sterling would get weaker.

    If economic data between now and the next few weeks is as expected, the rate will stay much and much the same but if the Economic data is different from the analysts expectation (very likely but impossible to predict), then the rates will change.


  • #3
    xabi
    Registered Users, Registered Users 2 Posts: 3,020 ✭✭✭xabi


    Thanks,

    is there an easy way to do this - will a bank hold cash in sterling for me?


  • #4
    Bluetonic
    Registered Users, Registered Users 2 Posts: 7,588 ✭✭✭Bluetonic


    If your happy with the rate now just lock it in and buy a EUR/GBP forward option from a bank. Use the option if the rate has fallen, if it has risen don't use it. You'll pay a small premium for the option regardless of use.

    You'll find plenty of info online, all the major banks offer them.


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