sterling advice?

daithijjj

hi folks, i recently moved back to the 'eurozone' from the uk and i decided to leave the bulk of my savings in an online saver account and a mini cash isa. I worked and saved long and hard over a few years and have a substantial (to me anyway) amount saved.

2 years ago (roughly) sterling peaked versus the euro and im kicking myself now obviously as i could have walked in and converted most of it at an attractive 1.42 euros to the £ and im somewhat annoyed *sigh* that i did not follow through on this. Essentially, what i would like at this point is constructive advice or any thoughts as to what you would do in my situation. With sterling seemingly continuing on its relentless march towards parity with the euro would you be inclined to cut your loses and purchase euros or would there be any benefit in wading out the storm and see what sterling does over the next six months?

Perhaps theres someone out there who has a more educated prognosis on how sterling might perform in the longer run as im sitting uneasily at the moment as to what might be the best move. Im not desperate to put euros in the bank but neither am i enamoured by the falling savings rates applied to me by my british bank.....(lost roughly 22% alone on interest just in one month)............i will gladly entertain any words of wisdom, prophecies, doctrines or mild mannered fortune telling on this connundrum im having..........merry xmas to you all.........daithi.

dotsman

The big question is when do you need the money? If you are looking for it any time over the next year, then I think now is as good as it's going to get. However, if you can wait, no doubt the exchange rate will improve again in time.

Basically, at the moment, with the UK in a recession and cutting interest rates dramatically, investors are dumping sterling and putting there money into Euro which they see as far more stable. Also, the ECB, although cutting rates, are not doing it as dramatically and are unlikely to go as low as the British (but they will still be low, so you are unlikely to find a high return even here!)

There's no way to accurately predict what will happen (if there was I'd be a very rich man:D), but if you are treating this savings as life savings, then I would leave them. If you plan on using this money in the next year or so, or if you can find a bank here that you can lock the money in at a high interest rate, then I would transfer it now.

Ogham

I was in a similar situation a few years ago (but the pound was a lot stronger). I moved half of it at a time.
Changing half into euros now - you will reduce the losses if sterling really drops - but at the same time keeping some back to convert when / if it gets stronger again. Doing it thay way just stops you having those "what if" thoughts all the time . Also don't go through the banks - use a currency broker . I used these Currency Solutions - and saved a couple of hundred euro on what the bank would have given me.

daithijjj

thanks for the reply folks. I guess i dont really need the money as such in the next 12 months but we all know that in this interim god only knows whats on the horizon or in gordon browns mind. Im half tempted to just leave it there and just bide my time, i can stick another £3000(the max) into the isa on april 1st and earn tax free savings at roughly 5% give or take.

I thought about investing some of it but its choppy seas at the moment and im not a great swimmer so to speak. Theres also the slim possibility that i may move back to the uk. Coupled with the dilema that i may need instant access to it at any given time im not really happy hedging that way at this point in time.

My own guess is, that it will be at least 2 years before sterling strengthens to anywhere near its figures from 2 years ago and with the proverbial backside falling out of the housing market over there maybe it would be prudent to hold out a little longer and with some astute timing invest in that market. This could also reinflate any lost equity in this period at a quicker level once the house prices start going up again. Its a bit hit and miss but if i could catch house prices as they plateux, they are unlikely to fall further at that point (he said with very little confidence).

What would you think about a possible purchase of the dollar, i know its fluctuating horrifically but as this is stormy weather at the moment if it starts to spiral again maybe thats an option. Please understand im just thinking out loud here, and would greatly appreciate any further input from anybody...................once again thanks very much for the replies, ive taken what you have both said on board........i will have to get myself more closely involved with the savings options in ireland but im also definitely behind the rest of the class on that here.

greenman09

Alternatively you could open a sterling account in one of the banks. And if you dont need it for x amount of time u could maybe choose one of the fixed term accounts and gain a little interest. Its not a good time to change to euro for the foreseeable i think. 109 last week for 100 stg. For yourself the option of a sterlin ac seems the better option. You can lodge and withdraw sterlin at your leisure. In an oncall account. Good luck with what u do.