by Richard Taylor on Jul 17, 2020

The Economy Stock Markets & Investing, Financial Planning

Currency, and more specifically GBP Vs USD, is a big topic for our clients. The days of 2:1 (GBP:USD) look a distant memory and following the Brexit decision the majority of people we speak to have a reluctance to move money to USD. Here Richard discusses the currency pairing broadly and the factors affecting the relative GBP weakness and USD strength. We cannot predict the future but here's our interpretation of the pairing and whether this is the new normal?


00:00    We have lots of clients with money in pounds, GBP. And as the vast majority of our clients plan on retiring in the US and therefore their future is in dollars. There's a lot of anxiety right now about when they should be converting into dollars. You see the pound right now against a dollar is really weak, but at 1.23, and there's loads of us who remember it in the days when it was $2 to the pound. And really in my experience, everyone seems to have this figure of about 1.5 being fair, reasonable, or a goal, at least right now, to get to. And we seem a long way from that. And if anything's we're getting further from it. See, because over the last few years, as the pound has gone on weaker, really pushed off a cliff by Brexit. The dollar has also correspondingly got stronger.


00:46   So it's been a real double whammy over the last few years. And people started to wonder if or when it's ever going to change. We expect that it will change. We hope that we're around as bad as it'll get right now. I'm not saying it won't get worse in the immediate term, particularly what happens with this crisis and the dollar being a safe haven for the world. But we do expect, we think the dollar is too strong. The US doesn't want the dollar this strong, it hurts exporters, and plus with the debt to GDP, what it's going to be, we really do expect that the dollar is going to trend weaker in the coming years. Also, we hope that once we're through Brexit, good or bad, just the removal of certain uncertainty will lead to a boost in the pound. Now there's also obviously a lot going on, especially with currencies.


01:33    There's so much at play who knows, and to be clear, we only need one of these currencies to move in the right direction for us to benefit, for it to be more attractive to convert our GBP into dollars. But if, you know, if this trend does reverse itself at the same time, the dollar weakens, and the pound strengthens well, that would be a huge boost to people who are looking to convert pounds dollars. So if this applies to you, there are other people in the same boat. Don't despair. You know, it's always darkest just before dawn, as they say. We do, we expect that this is going to change. It might take a few years, but it's going to change, we think. So this applies to you, and you want to know more, you want stay up on this kind of stuff, head to our website, sign up for our newsletter. We'd love to keep in touch with you.


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