Euro v's Pound Forecast

Black Beard

Just wondering if anyone has any idea what the pound might do against the euro over the next 12 months??

I've been made an offer of a fixed rate of £1/€1.17 for the next 12 months, or go with the daily rate, I'm paid in sterling and it's converted to euro.

I would have thought the pound would get stronger than €1.17 over the next 12 months, but any info would be welcome.

Thanks

ixus

I assume these are wages?

Check out this chart for a look at the trend over the past two years.

The pound reached near parity when it looked like the UK would suffer more than the EU. When it became evident that the EU was also in dire straights, it moved away from parity. That's one view.

It's a difficult one, it's entirely possible the pound could go back to 1.50 or back to parity in the present markets. Is it possible to fix for 6 months then review?

Could you open a UK bank account and get paid into that, then transfer to your Irish account when you feel the fx rate is more advantageous?

Black Beard

Thanks Ixus, yes it's my wages. The fixed rate of €1.17 is fixed for 12 months.

I was thinking because the UK cut their interest rates a good time before the ECB cut theirs, that the pound would recover earlier than the Euro. Any thoughts?

I could open a UK account, all I need is an address, but I kinda need my wages for living and stuff. So I wouldn't be able to leave them sitting in another account for too long.

ixus

But if you're working/living in the UK (including the North), you're surely better off getting them in sterling?

Say you're travelling across the border to work, and get paid in euros to an Irish account. You win/lose out on the fx difference and you then have to change money back into sterling each week/month to live up North or by lunch etc up there. You'd lose out again on commission for changing back.

I'd guess the 12 month fixed rate is in the favour of the company. They buy forward in euros with the hope/expectation that sterling increases so they get to pay you less in wages from their point of view. The company sees sterling as becoming stronger in the future. They may of course be incorrect.

Just thoughts that hit me. It is a difficult decision.

Black Beard

Thanks Ixus again for the input.

I live in the Republic but am paid in sterling, so keeping the sterling until a suitable rate arises doesn't really suit me, although it is an alternative.

I was thinking the exact same as you, that the company might think the sterling will get stronger than €1.17 over the next 12 months & save money paying me.

BUT, this time last year they offered me a fixed rate of €1.41/£1, which I jumped on!!
So I don't know if their crystal ball is in working order.

Basically no matter what I'm taking at least a 20% pay cut, I'm just trying some damage limitation, but I'm really tempted to go with the variable rate and take a gamble.

Thanks again for your 2 cents!

Black Beard

Bump!!

ANYONE!!!

luap_42

Black Beard wrote: »

I was thinking the exact same as you, that the company might think the sterling will get stronger than €1.17 over the next 12 months & save money paying me.

BUT, this time last year they offered me a fixed rate of €1.41/£1, which I jumped on!! So I don't know if their crystal ball is in working order.

Basically no matter what I'm taking at least a 20% pay cut, I'm just trying some damage limitation, but I'm really tempted to go with the variable rate and take a gamble.

Thanks again for your 2 cents!

Today's rate is €1.173/£1, so you would be matchnig the daily rate if you took the offer today. I've just been checking euro sterling forescasts and trends and one "expert" says that the rate should head towards €1.25/£1 by the end of 2009. So on that basis you would be better off for the next 6 months at the daily rate, and maybe they will offer you another inflated rate for the six months after that.