Article 50 - £ and the USA $

Article 50 - £ and the USA $

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Discussion

andy67b

Original Poster:

61 posts

116 months

Monday 20th March 2017
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Hi, I'm traveling to the USA later this year and thought, would I be better off in exchanging my currency before after article 50 is triggered or after? not even sure what the exchange rate is at present either. Do you guys expect the £ to take a big hit after article 50 is triggered?
Thanks in advance

fido

16,796 posts

255 months

Monday 20th March 2017
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I'm going to take this thread at a slight tangent to '£ and the EUR' - thinking of opening a long position. Been waiting for over a year, and I feel it has bottomed out with the UK economy looking reasonably stable relative to the Eurozone and the £ has priced in the worst that Brexit can throw at it. Relative to the $ is another matter - I think the £ has a bit further down to go but related to interest rate differentials not Article 50. My tuppence/cents worth anyway ..

SDarks

180 posts

92 months

Monday 20th March 2017
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My business operates in a USD currency market and I have been advised to buy as many dollars as I can before article 50 goes live. The currency trader I use expects a big drop in the pound value.

stuno1

1,318 posts

195 months

Monday 20th March 2017
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Big drop but for how long and how low. It has been at 1.21 -1.25 for a long time now. As soon as the brexit vote was done the hit came and it fell 30 cents ish. So has the true impact already been felt?

citizensm1th

8,371 posts

137 months

Monday 20th March 2017
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I would expect the dollar to strengthen not due to brexit but to to continued U.S. interest rate rises

Mezger

370 posts

106 months

Wednesday 22nd March 2017
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interesting question, I have a similar dilemma but with SGD to GBP, after yesterdays inflation news of 2.3% pound jumped up slightly, only one months figures but if that trend continues, who knows, they may gently increase UK interest rates.

As for your original question ref pre or post Article 50, can't help but think its like equities and the news is already priced "in" given we know it will be triggered for sure on March 29th.. we may even see a slight increase in sterling once its announced.

Any other thoughts/opinions welcome?

Behemoth

2,105 posts

131 months

Wednesday 22nd March 2017
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Mezger said:
ref pre or post Article 50, can't help but think its like equities and the news is already priced "in" given we know it will be triggered for sure on March 29th.. we may even see a slight increase in sterling once its announced.
Nothing is priced in as nobody has any idea what the forex rates will be, whether that's short term, medium term or long term. Sterling forex will fluctuate ball by ball in this game as rumours and real events come and go. There may be occasional runs, possibly fours & sixes before the home team's innings is out. The only certainty is that nobody knows the result.

Stig

11,817 posts

284 months

Wednesday 22nd March 2017
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SDarks said:
My business operates in a USD currency market and I have been advised to buy as many dollars as I can before article 50 goes live. The currency trader I use expects a big drop in the pound value.
My currency 'trader' gave three possible scenarios (honestly!)

1. Sharp fall to the pound
2. Pound will strengthen
3. Rates will remain nominally the same.

I kid you not!

They are as clueless as the rest of us. Will talk up their own position in order to short/long. I got badly burnt pre referendum where they all said the GBP/EUR rate would hit 1.5 - the opposite happened.

In my experience, whichever way you call it, it will go the other way!

NRS

22,152 posts

201 months

Wednesday 22nd March 2017
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Stig said:
My currency 'trader' gave three possible scenarios (honestly!)

1. Sharp fall to the pound
2. Pound will strengthen
3. Rates will remain nominally the same.

I kid you not!

They are as clueless as the rest of us. Will talk up their own position in order to short/long. I got badly burnt pre referendum where they all said the GBP/EUR rate would hit 1.5 - the opposite happened.

In my experience, whichever way you call it, it will go the other way!
I'll charge you half the price you're giving them and can give a similar level of advice if you're interested?

boxst

3,716 posts

145 months

Wednesday 22nd March 2017
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I'm interested in knowing this. GBP has gone up in the last few days to $1.25 and I'm unsure. I am looking the other way as I have quite a few USD that I want to convert into GBPs and am waiting of bit to drop again.

Any advice would be great.

itchy1977

53 posts

131 months

Thursday 23rd March 2017
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I'm a currency trader, and as previous posters have said, nobody can really predict what will happen. I've been doing this for 11 years and if we could forecast the market I'd be in the classifieds spending millions on cars not posting in the forums while I'm at work

You can make an informed judgement though. With Article 50 coming next week it is likely the Pound will drop in the short term. Having said that, Retail Sales figures this morning have pushed the Pound higher. For the OP looking at GBPUSD, then 2 factors should be considered: A period of uncertainty re Brexit is likely to weigh on the Pound. in the States, interest rates are expected to be pushed up 3 times this year that would strengthen the USD and make it more expensive to buy. For this reason we might see GBPUSD drop below $1.20. But there's different ways of looking at it. Another posted had USD to move to GBP. YEs it might drop a bit further, but considering the rate is pretty close to the lowest it's been in more than 30 years, do you want to hold out for an inch and risk losing a yard?

Hope that's been of some use. More info on my blog for those that are interested http://foreignexchangerateforecasts.blogspot.co.uk...

kurt535

3,559 posts

117 months

Thursday 23rd March 2017
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I'd factor in what the bond markets are doing as well.
Quant easing has really messed with the Bond vs stock market spread.
I'm wondering if the bonds start unwinding what this will do to the x rates. Any views anyone?

fido

16,796 posts

255 months

Thursday 23rd March 2017
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kurt535 said:
I'm wondering if the bonds start unwinding what this will do to the x rates. Any views anyone?
Surely the opposite effect to what QE has done (reduce forward yields) and thus reduce forward FX rates? In any case, I wouldn't expect the BoE to unwind QE until the economy can cope with it. P.S. I bottled and closed my long GBP/EUR position with a 1% profit (£100)!

Edited:- meant QE unwind => yields down, FX rate up

Edited by fido on Thursday 23 March 21:45

kurt535

3,559 posts

117 months

Thursday 23rd March 2017
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fido said:
kurt535 said:
I'm wondering if the bonds start unwinding what this will do to the x rates. Any views anyone?
Surely the opposite effect to what QE has done (reduce forward yields) and thus reduce forward FX rates? In any case, I wouldn't expect the BoE to unwind QE until the economy can cope with it. P.S. I bottled and closed my long GBP/EUR position with a 1% profit (£100)!
i really have no idea. some days it worries the hell out of me as i can't work out whether it will be a soft landing or it will add to brexit and multiply the effects.

mind you, if you cant work out what to do, safest thing is probably do nothing!

jeff m2

2,060 posts

151 months

Sunday 26th March 2017
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The big money prices stuff in long before us peons start looking at our holiday money.
I would guess a moderately poor Brexit deal is already accounted for.
Can anyone actually see it being a great deal for UKsmile

Medium term effects on the Dollar could be further rate rises and new trade deals. Those deals being made under threat of US import taxes.
If the US Dollar were allowed to get too strong all that would be in vain. It would also hit Dollar denominated emerging market countries reducing world trade.
So I don't believe the Dollar will move up significantly.

Any weakening of the Pound would increase inflation and put pressure on Carne to raise UK rates or the UK Gov inflation linked outgoings would spiral. Effectively supporting the Pound.
Perhaps not spiral, but certainly make budgeting difficult.

A stronger Dollar is in nobodies interest except maybe China.
A weaker Pound would not benefit UK.

I think, I may be alone, the Pound could be at 1.30 in 12 Months.
Short term fluctuations could see slightly lower rates, but I think each low would bounce back.


kurt535

3,559 posts

117 months

Sunday 26th March 2017
quotequote all
jeff m2 said:
The big money prices stuff in long before us peons start looking at our holiday money.
I would guess a moderately poor Brexit deal is already accounted for.
Can anyone actually see it being a great deal for UKsmile

Medium term effects on the Dollar could be further rate rises and new trade deals. Those deals being made under threat of US import taxes.
If the US Dollar were allowed to get too strong all that would be in vain. It would also hit Dollar denominated emerging market countries reducing world trade.
So I don't believe the Dollar will move up significantly.

Any weakening of the Pound would increase inflation and put pressure on Carne to raise UK rates or the UK Gov inflation linked outgoings would spiral. Effectively supporting the Pound.
Perhaps not spiral, but certainly make budgeting difficult.

A stronger Dollar is in nobodies interest except maybe China.
A weaker Pound would not benefit UK.

I think, I may be alone, the Pound could be at 1.30 in 12 Months.
Short term fluctuations could see slightly lower rates, but I think each low would bounce back.
good answer. ty

sparks_E39

12,738 posts

213 months

Sunday 26th March 2017
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Just yesterday flew back to the UK after 7 days in Orlando and 3 in New York. We had a wonderful time and decided we'd rather spend all of our dollars ($2000) than suffer the miserable exchange rate on converting it back to the pound.

bloomen

6,893 posts

159 months

Monday 27th March 2017
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sparks_E39 said:
Just yesterday flew back to the UK after 7 days in Orlando and 3 in New York. We had a wonderful time and decided we'd rather spend all of our dollars ($2000) than suffer the miserable exchange rate on converting it back to the pound.
Um, aren't you getting your ends mixed up? The current malaise is superb for dollar holders looking to spend here.

sparks_E39

12,738 posts

213 months

Monday 27th March 2017
quotequote all
bloomen said:
sparks_E39 said:
Just yesterday flew back to the UK after 7 days in Orlando and 3 in New York. We had a wonderful time and decided we'd rather spend all of our dollars ($2000) than suffer the miserable exchange rate on converting it back to the pound.
Um, aren't you getting your ends mixed up? The current malaise is superb for dollar holders looking to spend here.
Oh I know, it's just an excuse to have an even better holiday!

boxst

3,716 posts

145 months

Wednesday 29th March 2017
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Not much of an effect by the triggering of Article 50 -- down 2c to $1.24. I was looking to sell at $1.20.