Post Brexit money moves.
June 28, 2016 10:48 AM   Subscribe

My wife and I have several thousand quid sitting in a UK bank account. Is the pound going be stable at this rate? Drop more? Bounce back?

The past week has been a bit painful with the sharp drop of the pound. We had left our treasure pile there because we might need to pay a top up into her UK state pension to get to the minimum threshold or lose it all (10 years - we were only there for 8 years). Should we transfer it out and just take the exchange hit to pay into the pension later when HMRC gets back to use with our options?

I am aware that timing the currency market is a bit ridiculous but I can't help but feel like we would be bailing at the bottom and that Brexit blues are driving the pound further down that we should.

Really I just want to get a sense of what kind of volatility could be in store, possibly timing of future news that could hit the value and such.
posted by srboisvert to Work & Money (2 answers total)
The futures markets don't seem to show any strong trend. If you are going to eventually spend the money in pounds, then the you'd reduce risk by leaving it there, because there's uncertainty about the difference in exchange rates between when you switch to dollars and when you switch back.
posted by Mr.Know-it-some at 11:00 AM on June 28, 2016

Nobody knows, which generally implies extreme volatility. The worst case floor could be around parity with the dollar, but some people except $1.20-1.30. And of course anything is possible. Things are probably going to get worse before they get better, but there is no "timing of future news". If there were, the price would already have adjusted. Nobody knows anything, and anyone who says they do is kidding themself.

The top-up required for state pension is around £700 per year, right? So we're talking about what to do with two years of voluntary contributions, i.e. about £1500? In that case, you're overthinking this.

Do you have more than £1500 in the UK, and no plans to return? If you do, I'd transfer all but the last £1500 out. And if you need the last £1500 right now, transfer it out and transfer it back in when you want to top up the pension. The exchange rate might be 30% different or more, but that's not the end of the world in an absolute sense. But if you don't need that last £1500, leave it in the UK.

By the way, the "exchange hit" to transfer £1500 into the UK is about £7 with Transferwise.
posted by caek at 11:11 AM on June 28, 2016 [7 favorites]

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