# Buy sterling now?



## Scouser (4 Dec 2008)

I recently sold my car and plan on going to the UK in the new year to pick another up. Would it be advisable for me to put the cash into sterling now as the rate is so good? Or is it likely to remain around this level for a  while?

Thanks,

X.


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## callybags (4 Dec 2008)

Hi Xabi
If it was me. I would buy the sterling now. If you are happy with the rate then "lock it in" rather than speculate.


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## Scouser (4 Dec 2008)

OK, whats the easiest way to do this?  Will a bank here let me keep sterling?

X.


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## callybags (4 Dec 2008)

You could just buy sterling cash if it is not a huge amount and you are happy to keep the cash. Alternatively you can get a sterling draft. It would need to be made out to cash, otherwise when you go to the UK you will not be able to cash it.


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## LouisCribben (4 Dec 2008)

Nobody in the world (not even the worlds smartest person) knows what's going to happen to the Sterling Euro exchange rate in the short/medium or long term.

If someone knew for certain, they could potentially become very rich by either buying sterling with euros, or buying euros with sterling.

If you buy Sterling now, sterling could get weaker (and you would lose), or sterling could get stronger (and you would win).

There is probably a 50-50 chance that you would win, and obviously a 50-50 chance that you would lose.

You describe the exchange rate as "good" at the moment. 
The exchange rate is neither good nor bad, it is exactly where the market thinks it should be.
The exchange rate could change in your favour between now and the new year, or the opposite could happen, quite simply nobody knows.

Anybody who tells you what is going to happen to the exchange rate in the short/medium or long term does not understand how currency exchange rates are determined. The only answer anyone can give is "It's impossible to know".


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## DerKaiser (4 Dec 2008)

LouisCribben said:


> Nobody in the world (not even the worlds smartest person) knows what's going to happen to the Sterling Euro exchange rate in the short/medium or long term.
> 
> If someone knew for certain, they could potentially become very rich by either buying sterling with euros, or buying euros with sterling.
> 
> ...


It doesn't matter that we dont know how the exchange rate will move.  

If you are planning on spending say £12k sterling on a car in the new year you should set aside £12k sterling now.  This is approximately €14k.

You know you are spending the sterling so to do anything other than set aside a sterling amount now would be speculation.


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## LouisCribben (4 Dec 2008)

DerKaiser said:


> If you are planning on spending say £12k sterling on a car in the new year you should set aside £12k sterling now. This is approximately €14k.


 
I disagree DerKaiser. It's possible that Sterling will weaken against the Euro before he buys his car in a months time. If £12k = €14k now, then in the new year £12K could be 13.5K if sterling weakens.
Of course the opposite could happen too, and he could lose by not changing now, nobody knows.



DerKaiser said:


> You know you are spending the sterling so to do anything other than set aside a sterling amount now would be speculation.


 
I disagree DerKaiser, changing the money now (as opposed to changing it in a months time) is also speculation. By changing the money now, the op is speculating that Sterling will strengthen against the Euro in the next month (which may not happen)


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## DerKaiser (4 Dec 2008)

LouisCribben said:


> I disagree DerKaiser. It's possible that Sterling will weaken against the Euro before he buys his car in a months time. If £12k = €14k now, then in the new year £12K could be 13.5K if sterling weakens.
> Of course the opposite could happen too, and he could lose by not changing now, nobody knows.
> 
> 
> ...


 
In the same way that not putting money on the nags is a form of speculation.  You'll be worse off having kept your money in your pocket if your horse comes in


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## ccraig (4 Dec 2008)

Trying to predict what way sterling will go is impossible but using the bank will guarantee you get a worse rate,

try xe or currency.ie
http://www.askaboutmoney.com/showthread.php?t=78778


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## Joody1 (8 Dec 2008)

I have some money in the BoI and want to change it into sterling...today I phoned the bank and asked what I would get for my euros into sterling and  BoI calculated over 3k less than the online calculator.  Is there anyway I can do better as the saving is with BoI, do I have to use them to change it over to sterling.


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## johnnygman (8 Dec 2008)

Of course you dont you can change your money into Sterling in any bank, altough rates will be fairly similiar across all institutions.


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## mooney76 (8 Dec 2008)

currency.ie change sterling to euro, cheaper than the bank but always shop around


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## beekeeper (9 Dec 2008)

In my opinion and judging from the price action in EurGbp we will see it above 0.90 in the new year.


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## Joody1 (12 Dec 2008)

johnnygman said:


> Of course you dont you can change your money into Sterling in any bank, altough rates will be fairly similiar across all institutions.



do you have to take your money out of a bank before you can change the currency with say currency.ie for instance, also how do you go about doing this if it is possible.

Joody1


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## johnnygman (12 Dec 2008)

Joody1 said:


> do you have to take your money out of a bank before you can change the currency with say currency.ie for instance, also how do you go about doing this if it is possible.
> 
> Joody1


 

To be honest ive never used an online site for currency trading but it would seem natural that you would have to withdraw or transfer your funds to this company in return for your sterling.
If you are changing this money in a branch you would have to withdraw the funds from your account and change them at the foreign exchange rate on the day for either sterling cash or a sterling draft.
Hope this clears up you question


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## BarryJ (10 Jan 2009)

What do people see Sterling doing in the near future? it seems to be on the way back down, will this tred continue do you think? I want to buy a 16K Sterling soon, the question is hang on and see if it recovers again or go now....


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## beekeeper (10 Jan 2009)

In my opinion we will see EurGbp at 1.05 before we see it at 0.75.  Its currently trading at 0.8850 so if my view is correct i  would wait before converting.  You could leave yourself a level on top and level on the bottom.  ie. if we trade at 0.75 i will convert then and take the hit otherwise i will wait for 1.05.  This is if you agree with my opinion and also have the time to wait.


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## DerKaiser (10 Jan 2009)

the current rate is based on the best information available to the market so you are likely to get as many people saying to hold off as will say buy now.

There's a pretty basic idea in economics (and life) that says people prefer certainty and like to avoid risk.  With this in mind it is advisable to get rid of the currency risk and buy the sterling at current rates.  At least this way you'll now know the exact cost of the £16k rather than have it fluctuate in a way you have no control over.


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## BarryJ (12 Jan 2009)

I see, and you don't think the recent lowering of interest rates to 1.5% has an effect, be it positive or negative?


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## Saudi (12 Jan 2009)

I'm also interested in this.  I need to have a sterling bank draft in place by the end of the month and wondering whether I should lock in the rate now.

Am I correct in thinking that speculators have driven the Euro value down because they are expecting a large rate cut from the ECB this week (anyone know what day the ECB are making an announcement?)?  If so are you better off waiting until the new rate is announced and the price should then reflect the true value and not the speculated value? Or is that way too simple a view!?

S


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## demoivre (12 Jan 2009)

Saudi said:


> I'm also interested in this.  I need to have a sterling bank draft in place by the end of the month and wondering whether I should lock in the rate now.
> 
> Am I correct in thinking that speculators have driven the Euro value down because they are expecting a large rate cut from the ECB this week (anyone know what day the ECB are making an announcement?)?  If so are you better off waiting until the new rate is announced and the price should then reflect the true value and not the speculated value? Or is that way too simple a view!?
> 
> S



Yes. Your logic would suggest that sterling should have fallen through the floor last Thursday when the BOE lowered the Bank rate by 50 bp to 1.5% thus increasing further the yield differential  between sterling and the euro. The opposite has happened !


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## Saudi (12 Jan 2009)

I think a larger cut was expected by the BOE and because the ECB rate announcement was due this week the speculators have pushed the Euro down in expectation of a larger cut than 50bp.


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