Savings in dollars, Mortgages in Pounds -WWYD
Discussion
What would *I* do?
The Dollar has rarely in history been as strong as t is at the moment against the Pound. If i had USD savings I'd be moving them into GBP and, while you're at it, pay down that mortgage. I don't see the point in earning 1% on savings and paying 2-3% (assumed) for debt. The best place for those savings is paying off your mortgage.
Could the Dollar get even stronger? Of course it could; I don't claim to have a crystal ball to know the future and no one can. But the historical range says that with a 3-5 year time horizon, you shouldn't be too far off the best point to transfer Dollars to Pounds. My view is a lot of bad news is priced into the Pound and any change in sentiment re Brexit will be positive for the Pound. Things could, of course, get worse but I don't think they will go worse than what I perceive to already be priced in.
Good luck.
The Dollar has rarely in history been as strong as t is at the moment against the Pound. If i had USD savings I'd be moving them into GBP and, while you're at it, pay down that mortgage. I don't see the point in earning 1% on savings and paying 2-3% (assumed) for debt. The best place for those savings is paying off your mortgage.
Could the Dollar get even stronger? Of course it could; I don't claim to have a crystal ball to know the future and no one can. But the historical range says that with a 3-5 year time horizon, you shouldn't be too far off the best point to transfer Dollars to Pounds. My view is a lot of bad news is priced into the Pound and any change in sentiment re Brexit will be positive for the Pound. Things could, of course, get worse but I don't think they will go worse than what I perceive to already be priced in.
Good luck.
Last night’s vote hasn’t had a relevant impact on Cable which is an interesting little moment that supports the above view.
For most of my working career Cable has been around the 60p per $1 level. It’s current level at around 80p is the highest I seem to recall over the last 20/25 years off the top of my head.
Over the medium to long term we’re going to need the GBP to weaken considerable or the USD to strengthen to get a significantly better exchange rate. The latter doesn’t seem too likely and while I would think the former is a distinct possibility the price action of the last 24 hours suggests that that risk has been priced in since the vote and is what moved us out of that 60p range into this 70-80p range.
All in, I suspect that if you weigh up the risk of getting a better conversion in a few years time, or maybe worse and the risks of holding cash outside of your domestic protections all in the knowledge that it’s a conversion that you need to do at some point then I suspect today is as good a time as next year or the year after.
Two other points to consider is that a run on Sterling is combatted by raising interest rates. If a post Brexit environment triggers an exodus of foreign controlled money than the damage done by not raising rates to stem that could be greater than the damage done by spiking rates causing domestic borrowers to default. And if you are sitting on a large amount of USD then where would the harm be in deciding to cross blocks of it over to GBP at 6/12 month intervals?
Ultimately we are in pure tealeaf territory when it comes to guessing where Cable will be in a few years time.
For most of my working career Cable has been around the 60p per $1 level. It’s current level at around 80p is the highest I seem to recall over the last 20/25 years off the top of my head.
Over the medium to long term we’re going to need the GBP to weaken considerable or the USD to strengthen to get a significantly better exchange rate. The latter doesn’t seem too likely and while I would think the former is a distinct possibility the price action of the last 24 hours suggests that that risk has been priced in since the vote and is what moved us out of that 60p range into this 70-80p range.
All in, I suspect that if you weigh up the risk of getting a better conversion in a few years time, or maybe worse and the risks of holding cash outside of your domestic protections all in the knowledge that it’s a conversion that you need to do at some point then I suspect today is as good a time as next year or the year after.
Two other points to consider is that a run on Sterling is combatted by raising interest rates. If a post Brexit environment triggers an exodus of foreign controlled money than the damage done by not raising rates to stem that could be greater than the damage done by spiking rates causing domestic borrowers to default. And if you are sitting on a large amount of USD then where would the harm be in deciding to cross blocks of it over to GBP at 6/12 month intervals?
Ultimately we are in pure tealeaf territory when it comes to guessing where Cable will be in a few years time.
As per Donkeyapple. Really can't recall cable being as strong as this is in my career.
If anything I think the market is pricing in any upside to the US, so wouldn't expect to see major transformative further strengthening in the short term. If as you say you've got US savings and a long term UK plan this is as good a time as I can recall to move funds back to UK, especially so if you're using them to pay down sterling debt given the 'net' interest you're paying versus the US 'gross' you're receiving.
If anything I think the market is pricing in any upside to the US, so wouldn't expect to see major transformative further strengthening in the short term. If as you say you've got US savings and a long term UK plan this is as good a time as I can recall to move funds back to UK, especially so if you're using them to pay down sterling debt given the 'net' interest you're paying versus the US 'gross' you're receiving.
DonkeyApple said:
Cable
I've learned something today:https://en.wikipedia.org/wiki/Cable_(foreign_excha...
JulianPH said:
Another vote for the Donkey. 
I venture out of the 'watches' section only occasionally (on a car forum - I know, I know...), but when I do, I find DonkeyApple's contributions interesting & always worth a read. Kudos to all the other contributors on this thread too, as I have the same quandary - a useful place, this, 
CzechItOut said:
Me too My 2 cents / 2 pence on this...
It baffles me that people think they are somehow amazing currency traders.
If someone on the street came up to you and said, "would you like to put on a many thousand pound bet against the dollar or against the pound?" you would most likely tell him to FRO.
But in effect, you have said YES! Bring it on!
I think it is absolutely crazy to have a significant exposure mis-match.
In other words, income and savings in one currency vs expenses and debt in another.
You are just asking for completely unnecessary trouble...
You have made out like a bandit recently owing to Brexit but it could so easily have gone the other way!!
It baffles me that people think they are somehow amazing currency traders.
If someone on the street came up to you and said, "would you like to put on a many thousand pound bet against the dollar or against the pound?" you would most likely tell him to FRO.
But in effect, you have said YES! Bring it on!
I think it is absolutely crazy to have a significant exposure mis-match.
In other words, income and savings in one currency vs expenses and debt in another.
You are just asking for completely unnecessary trouble...
You have made out like a bandit recently owing to Brexit but it could so easily have gone the other way!!
walm said:
My 2 cents / 2 pence on this...
It baffles me that people think they are somehow amazing currency traders.
If someone on the street came up to you and said, "would you like to put on a many thousand pound bet against the dollar or against the pound?" you would most likely tell him to FRO.
But in effect, you have said YES! Bring it on!
I think it is absolutely crazy to have a significant exposure mis-match.
In other words, income and savings in one currency vs expenses and debt in another.
You are just asking for completely unnecessary trouble...
You have made out like a bandit recently owing to Brexit but it could so easily have gone the other way!!
I don't disagree. I work abroad and get paid in dollars so it's just a necessary evil. The bulk of savings is in pounds regardless as essentially, that's where my ultimate expense (house/schooling etc) will be down the the line. I was just thinking about what I save for expenses in my current location.It baffles me that people think they are somehow amazing currency traders.
If someone on the street came up to you and said, "would you like to put on a many thousand pound bet against the dollar or against the pound?" you would most likely tell him to FRO.
But in effect, you have said YES! Bring it on!
I think it is absolutely crazy to have a significant exposure mis-match.
In other words, income and savings in one currency vs expenses and debt in another.
You are just asking for completely unnecessary trouble...
You have made out like a bandit recently owing to Brexit but it could so easily have gone the other way!!
Donkey, thanks for the advice - I made some movements based on the logic.
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