January 15, 2035
Is now a good time to buy British pounds as a hedge against a potential decline of the U.S. dollar?
Absolutely. The Great Britain Pound (GBP) to United States Dollar (USD) rate is at an historic low rate of 1.22. That is, 1 pound is worth 1.22 dollars today. This is almost 30% below the average pound to dollar exchange rate since 1971, which is approximately 1.70.
Year Average GBP/USD Exchange Rate
In 1971, the pound and the dollar became fiat currencies after the collapse of the Bretton Woods Agreement. In 1944 many Western countries had entered into an agreement to promote monetary stability after the economic turmoil of the Great Depression and World War II. Signatories of the agreement pegged their currencies to the US Dollar, which in turn was convertible to gold at a fixed rate of $35 per ounce. The Bretton Woods system effectively ended in 1971 because the US government kept printing dollars in excess of its gold reserves to finance the Vietnam War and keep domestic social welfare programs. The other countries grew doubtful of the dollar’s value and began exchanging their dollar reserves for gold, depleting US gold reserves. In August 1971, President Richard Nixon announced the suspension of the dollar's convertibility into gold, effectively ending the Bretton Woods system. By 1973, most major currencies began to float freely, marking the transition to the current system of floating exchange rates.
British Pound to U.S. Dollar Exchange Rate From 1971 through 2024:
1971 2.42
1972 2.56
1973 2.44
1974 2.34
1975 2.22
1976 1.80
1977 1.75
1978 1.92
1979 2.12
1980 2.33
1981 2.02
1982 1.75
1983 1.52
1984 1.34
1985 1.30
1986 1.47
1987 1.64
1988 1.78
1989 1.64
1990 1.78
1991 1.77
1992 1.77
1993 1.50
1994 1.53
1995 1.58
1996 1.56
1997 1.64
1998 1.66
1999 1.62
2000 1.52
2001 1.44
2002 1.50
2003 1.63
2004 1.83
2005 1.82
2006 1.84
2007 2.00
2008 1.85
2009 1.57
2010 1.55
2011 1.60
2012 1.59
2013 1.56
2014 1.65
2015 1.53
2016 1.35
2017 1.29
2018 1.33
2019 1.28
2020 1.28
2021 1.38
2022 1.24
2023 1.24
2024 1.27
Average: 1.68
British Pound to U.S. Dollar Exchange Rate Today January 15, 2025: 1.22
As you can see, an exchange rate of 1.22 is historically low and unprecedented when compared to annual average rates. That means that if you buy pounds today you are converting dollars to pounds at a very favorable rate from a historic perspective.
No one knows what the rate will be in the future. No one knows if the "Trump Dollar" will remain forever strong or if it will even get stronger. We tend to believe that the Trump economy, the "Trumpconomy" as we call it will implode or at least melt. We doubt that the 78 year old can keep it up and strong as he says he will. But that's us. We have been wrong before, especially about everything Trump.
Three Future Possibilities.
Financial future is threefold as we say. There are three--and only three--possibilities about everything having to do with money and economic valuation. Values can go up, stay the same, or go down. The pound to dollar foreign exchange (FOREX) rate can go up, stay the same, or go up.
If you buy pounds now and the rate goes up in the future, you would make money by arbitrage. It the rate stays the same, you break even without make money or losing money other than trading fees, if any. If the rate goes down, you lose money until it goes up again.
What should you do? That's up to you. What are we doing at the Creatix investment desk? We are buying some pounds. Our bet or speculation is that the rate will eventually increase. Time will tell if we are right or not. Time will allows to know whether our move today was wise or dumb.
Now you know. Now you know how intelligence is made and how the system works. There's no magic in this universe; only work. Create more intelligence with us. Move to what comes after AI, which is BI (business intelligence). By the way, who coined the term BI for business intelligence? We did. Creatix did.
www.creatix.one
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