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Anyone Investing in Sterling?

  • 11-01-2009 9:47pm
    #1
    Exchange Rate
    Registered Users, Registered Users 2 Posts: 3 ✭


    Hi everyone,

    I was wondering if anyone out there is investing in Sterling?
    I'm seriously considering it at the moment. - Here's why....

    On Thursday last, the interest rates fell down to a record low of 1.5%
    From here, they can only really go up.

    So lets say I invest E5000 into Sterling.
    That would get me £4474.

    If interest rates go up, the demand for Sterling will increase as investors will deposit money in the UK - and at the same time, UK residents will keep money in the country.

    In theory, the Sterling would improve and the Euro would be less expensive to buy.

    So then if I convert the Sterling back to Euro, lets say at a rate of (E1 = £0.80), I would get €5592.50 back. A profit of €592.50:)

    Do you think this is too risky?


Comments

  • #2
    Victor
    Registered Users, Registered Users 2 Posts: 78,580 ✭✭✭✭Victor


    Too risky.

    What happens when interest rates hit 1%?


  • #3
    Blackjack
    Registered Users, Registered Users 2 Posts: 3,628 ✭✭✭Blackjack


    Exchange Rate wrote: »
    Hi everyone,

    I was wondering if anyone out there is investing in Sterling?
    I'm seriously considering it at the moment. - Here's why....

    On Thursday last, the interest rates fell down to a record low of 1.5%
    From here, they can only really go up.

    So lets say I invest E5000 into Sterling.
    That would get me £4474.

    If interest rates go up, the demand for Sterling will increase as investors will deposit money in the UK - and at the same time, UK residents will keep money in the country.

    In theory, the Sterling would improve and the Euro would be less expensive to buy.

    So then if I convert the Sterling back to Euro, lets say at a rate of (E1 = £0.80), I would get €5592.50 back. A profit of €592.50:)

    Do you think this is too risky?

    You're assuming that Sterling rates will only go up and you're not making any allowance in interest rate movements in Euro.


  • #4
    Woden
    Registered Users, Registered Users 2 Posts: 6,560 ✭✭✭Woden


    You also need to factor in how much you could earn by e.g depositing the e5000 in some type of savings account.


  • #5
    EIKNARF
    Closed Accounts Posts: 1 ✭EIKNARF


    what if brown folds he will give way and join eurozone then you will be wishing that you went skiing in alps to get rid of your lost euros ?????????


  • #6
    imalegend
    Closed Accounts Posts: 269 ✭✭imalegend


    From reading your post you dont have a good enough idea what pushes the euro and why it went to 95p to the euro last december. So i would advise you not to do this.

    Rates are one thing that impact on exchange rates but there are many other things and governments/central banks hold all the trump cards in the currency markets.


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