With the news that sterling is plunging, I was wondering how currency fluctuations will affect the price of stocks / ETFs.
Would I be right in thinking:
For shares denominated in USD, a decrease in the value of the pound would effectively decrease of the stock for UK investors. For example, if i buy 100 shares at 1.30 today, I spend £130. If the share price if unchanged in USD, then those 100 shares are only worth £100 if GBP/USD reach parity. (But conversely, I suppose you could potentially make extra if you successfully "bet" on a low point for £/ exchange AND the stock is on an upward trajectory?)
For GBP denominated ETFs that track US markets (S&P 500 for example) currency fluctuations are built into the price. So, even if the USD market price were static, the GBP price would decrease as the value of the pound decreases?
(It’s been a long day, so if I’ve got this totally wrong just about. I’ve confused myself at least 12 times).