How to hedge against Britain joining euro?

Question

+ demand, dealing fees & bid offer spread could do serious damage.
What is the best way to hedge without too much risk & still being able to spend in Brtitain?
Would £ denominated exporters do well?
Is it better to hold shares or cash?
Should I be buying CFDs? Eurobonds? Euro denominated shares?

Thanks!

Answer 1

How do you know what the effect of joining will be ?

It all depends on the exchange rate at the time of joining ... do we get 1 euro for each £ ? or do we get 2 euro for each £ ?

If you think the rate will be set low (eg. 1:1) then buying Euro's (or anything denominated in Euro's) now (at 1:1.5 rate) would be a good idea .. if you think te rate will be high, then keep your cash in ££'s (and get a lot more euro's later ...)

NB. If/when we join the Euro there will be no such thing as '£ denominated' because there will be no such thing as £ (just like the Franc, DM & Lira no longer exist)

Of course I guess some UK Companies could switch to USD ($)