When people move to France or split their time between the UK and France, one of the first financial questions they will have is often about currency. Should I hold my money in Pounds or Euros? Which is safer? Which will leave me better off in the long run?
It’s a fair question, and one that I have heard many times before. Unfortunately, there’s no magic, one-size-fits-all answer. What matters is not guessing the “right” currency but setting up a currency strategy that fits your lifestyle, your spending habits, and what you will need in the years ahead.
Why Guessing the Markets Rarely Works
What people really want is for someone to tell them what will happen next with exchange rates. They want to know whether Sterling will strengthen by the summer or if the Euro will fall after an election. The problem is nobody really knows what will happen.
Charts, forecasts, and economists’ reports can help you understand trends, but they are inherently backwards-looking. None of them predicted the Brexit result, the pandemic, or the war in Ukraine. None warned that Britain would see three prime ministers in a matter of months.
That is why trying to predict the future of currencies is a losing game. However, you can create a plan that protects you regardless of whether the markets go up or down. Think of it as setting your sails, not trying to control the wind.
The Risk of Going “All In” on One Currency
I often meet British expats in France who have gone all in on one currency, usually because it feels simpler. Everything in Sterling or everything in Euros. It might feel decisive, but it’s more like putting all your chips on red and hoping the roulette wheel lands your way.
If you live in France, spend in Euros, and pay French taxes, it makes sense to hold a good portion of your funds in Euros. That way, you are not constantly watching the exchange rate to see if your next supermarket shop or utility bill will cost you more this month.
However, many people still choose to hold all their capital in Sterling, even when they no longer earn income in the UK. Some do this out of habit, while others do it because they expect Sterling to “bounce back.” In reality, this approach creates a double exposure problem. You earn in Sterling and spend in Euros, leaving you at the mercy of exchange rates every single month.
Matching Your Currency to Your Life
The most sensible way to think about currency is to be practical rather than emotional. Where do you live? Where do you spend? What do you earn, and in what currency?
If your income comes from a UK pension, rental property, or investment dividends, you already have Sterling exposure. Adding even more Sterling to your savings will magnify that risk. Converting part of your capital into Euros would give you stability.
Let us say you plan to live in France full-time. You buy your food locally, pay for your utilities, and handle your taxes here. Those are all Euro expenses. Holding at least several years’ worth of living expenses in Euros means you can stop worrying about exchange rates on a day-to-day basis.
This doesn’t mean you need to abandon Sterling altogether. If you still have family, property, or expenses in the UK, there’s every reason to keep a Sterling reserve. But keeping everything in Pounds while living in France makes little sense. It’s like standing on one leg when you could easily use two.
Planning Income for the Medium Term
A good rule of thumb is to plan for the next three to five years. Work out how much you will likely need to live comfortably in France, then make sure that amount is available in Euros.
I often point out to clients that, even if they set aside five years’ income in Euros, it might only represent 10–15% of their overall assets. The rest of their capital can remain untouched in Sterling or other investments. This approach gives you flexibility. You can then relax and watch currency movements as an interested observer, rather than someone whose entire monthly budget depends on them.
It also means you can take advantage of favourable exchange rates when they appear, rather than being forced to transfer funds at the worst possible time.
Reducing the Stress Factor
Anyone who has lived through a sudden drop in Sterling knows how stressful it can be. You can wake up one morning and find that your pension income is suddenly worth 8% less in Euros than it was the previous month. That’s not just numbers on a screen; it can affect how much you spend, how often you travel, or even how relaxed you feel about money.
By planning your currency exposure ahead of time, you remove much of that anxiety. Your income becomes predictable, your living costs stable, and your life far less tied to the ups and downs of international markets.
Avoiding Emotional Decisions
People often make currency decisions emotionally, based on loyalty to their home currency or frustration with the other one. I have heard many say, “I’ll never hold Euros. The Pound will recover,” or “I don’t trust Sterling anymore.”
Neither view is constructive. Currency management is not about patriotism; it’s about practicality. Your financial well-being depends more on how you balance your exposure than on which side of the Channel you happen to prefer.
Building a Broader Financial Plan
Currency is just one part of the bigger picture. Your financial plan in France should take into account your tax position, income structure, investment portfolio, and residency status. Understanding how these factors interact with each other can make a big difference to your after-tax income.
For example, certain investment structures, available to French residents, such as an assurance-vie, can allow you to hold assets in multiple currencies within one tax-efficient wrapper. That flexibility can be extremely useful for people who still have income or obligations in both the UK and France.
The Cost of Doing Nothing
Failing to plan is itself a form of planning. It’s just not a very good one. If you keep everything in one currency and hope for the best, the markets will eventually remind you who is really in charge.
I have seen clients who delayed moving their funds until “things settled down.” Years later, they were still waiting. Exchange rates rarely stay stable for long. By the time many decide to act, they have already lost more in currency fluctuations than they ever would have spent on professional advice.
How a Professional Can Help
As mentioned, everyone’s situation is different, and there is no one-size-fits-all answer. For this reason, you must seek professional advice. An experienced financial adviser can model different exchange rate scenarios and help you work out how much to hold in each currency. They can also structure your investments to reduce unnecessary conversions and tax costs.
It is not about predicting the future but creating your own sense of certainty. When your finances are appropriately structured, external events have less power to disrupt your plans. You can focus on living your life in France rather than being consumed by the latest headlines.
Living between two currencies does not have to feel complicated. The key is balance. Think of it as steering your own course rather than letting the tide carry you. Once your currency strategy is in place, you will find that financial life in France becomes much calmer, even when the markets are anything but.