Sending Funds To Europe From Uk Then Back Again.

[pumpjack]

question.
if i sent 10k GBP ( approx 1120.00 euro ) to euro account this week .
and the markets stayed roughly same for 1 year
how much money would i receive in my uk bank account in one years time.

confused

[ToraToraTora]

well assuming the currency exchange is constant, you'll lose 10% (5% for each conversion) - you may gain some interest but minimal. Why on earth would you contemplate such a thing? You could lose a lot more if the pound falls. You could gain if the pound rises but it would have to rise a lot to offset the exchange rate fees. After a year you'd get about £9k back plus whatever meagre interest the target account has.

[KARL]

TTT is broadly correct. However on the basis you put forward, if the pound falls after you convert out of it then, in terms of pounds, you would gain at the end because the hedge/bet you would have gained on while your money is in a different currency gives you more pounds at the end once you go back to pounds. Historically, there have been years (12 month periods) when the fall in the pound made what you propose worthwhile. At best the bet would be like any other, guesswork with an entirely unpredictable outcome.

[pumpjack]

broadly speaking the pound would need to rise if i was to get back a little or break even ?
if the pound falls lower i would lose even more plus interest rate.

[pumpjack]

TTT thanks...why would i lose 5% each way ? who gets this 5%
i take pounds sterling in cash to my EU bank so who gets the 5%

[bhg481]

No, you've got it the wrong way round. Say 10 pounds buys 10 Euros now. The pound drops so that 10 pounds only buys 5 Euros. You have 10 Euros so you can buy 20 pounds.

[bhg481]

The banks charge you for changing one currency into another; you can see that by looking at the exchange rates in the banks where they quote one price for buying from you and a different price for selling to you.

[ToraToraTora]

"TTT thanks...why would i lose 5% each way ? who gets this 5%
i take pounds sterling in cash to my EU bank so who gets the 5% " - the banks charge to exchange currency. Next time you see a Bureau De Change, look at the list of rates, there are 2 columns, the one that is worst for you is the one you get! Apologies It's 2.5% (x2) fee not 5% but it will still amount to £500. For example the interbank rate for 1 pound = 1.12 Euro but you will get 1.09 so that's the first chunk gone.

[ToraToraTora]

I have iut the wrong way round above, if the pound falls whilst you are in Euros then you will get more pounds back but it will have to be a big fall to offset the fees.

[gulliver1]

If Brexit ever happens, you will probably never get it back at all.