The pound is falling as investors desert the sceptered isle. Is it time for Americans to move in? The Financial Times reports:
Hedge funds and investment managers are dumping sterling as disappointing economic growth in the UK, the threat of a downgrade of its debt and an upcoming change of guard at the Bank of England have fuelled concerns about a drop in the country’s asset values. [...]
The pound slid to a seven-month low against the dollar last week after the BoE warned that inflation would continue to be above its target and growth would remain sluggish.
Most of us aren’t interested in speculating on currency as a form of investment, but following currency trends is a great way for people on a budget to see more of the world over time. This is especially true in places, like the UK or Japan, where the currency historically tends to make the whole country expensive.
But it’s worth noting that the UK is a lot cheaper once you get outside London and the southeast. Gas is a horror, but it’s a small country by American standards (London to Edinburgh is roughly the same distance as Boston to Washington) and there are plenty of trains.
A good rule of thumb: when the pound is under $1.60, the UK is good value; at $1.50, the UK is begging you to visit. Under $1.40 and it’s definitely time for that trip. Under $1.30 and you can’t afford to stay home. With the pound currently sitting around $1.55, it’s time to keep an eye on flights.
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