Brexit Blues

Hi Scott,

My husband just inherited money from his mother in the UK. Unfortunately, the transfer to his UK bank account came through late last week as Brexit unfolded. We plan to use the money (250,000 pounds) for our retirement funding. However, the exchange rate has just wiped out a depressing chunk! We need to know what the cheapest and most reliable way is to get the money out of the UK so we can act as soon as the exchange rate looks more favorable. We're hoping it will bounce back up at least partially over the next few days or weeks. Help!

Marg

Hi Marg,

Yes, the pound got shirt-fronted by the Brexit vote. (My view is that Brexit will be like any other divorce: it’ll get dirty, it’ll be expensive, and it’ll drag on longer than it should.)

Right now the market says a pound is worth $1.80. However, if you look at it over a 10-year period, the pound has traded from as low as $1.44 (just over three years ago) to a high of $2.62 (during the GFC). So in that context, last week’s fall was a mere blip.Now, unlike most finance guys (middle-aged white men in suits), I’m honest enough to tell you that I have no idea what the pound will do in the future. No one does. ‘Hoping’ the currency will bounce back over the next few days or weeks is not a strategy.

The bottom line is that you can’t control the currency, but you can control how much you pay to transfer the funds to Australia. Generally speaking, avoid the banks (who will slug you with fees, then hit you again with a terrible exchange rate). Instead, use a regulated currency exchange specialist like OzForex or CurrencyFair.

Scott