Tuesday 21st October 2014
In the week since my last post, we have seen significant volatility in Pound/Euro rates. As you can see from the chart below, we have seen highs touching €1.27, and lows or nearly €1.24:
What is causing the volatility in GBP/EUR rates?
The movements in the exchange rate over the last week have been very large indeed. In the last 7 days alone, the cost of buying a €250,000.00 property has differed by nearly £5000.00 purely due to fluctuations in the exchange rate. This clearly illustrates how important your timing is, in addition to having a good knowledge of what can move the exchange rate.
The Pound fell last week on data and comments from the Bank of England, which suggest that interest rates are going to remain low for up to a year. This has taken the wind out of the Pound’s sales and caused exchange rates to drop.
The fall was short lived however, as data from the Eurozone doesn’t exactly inspire confidence. Various EU economies are not performing very well, and this has weakened the Euro helping the rate to recover.
Will Pound/Euro rates go up or down in the next 6 months?
I personally think that the Pound’s strong run has come to an end and all the good news surrounding the UK economy is now largely priced into the rate. The only thing I can see that would cause rates to rise would be a further deterioration of the EU economy.
Indeed I think it’s likely the European Central Bank will have to create money to pump in to the economy, which taken on its own could weaken the Euro and push rates up.
What’s hard to quantify however, is what the knock on effect of an EU slowdown would have on the wider global economy, particularly the UK. The EU is our largest trading partner and as Europe slows, our growth is also at risk. So a weakening of the Pound could also be a result of a weakening in the Eurozone.
In the short term, tomorrow’s Bank of England minutes showing how keen they are for an interest rate hike is the main event this week that will affect Sterling exchange rates.
Get in touch to find out how to get the best exchange rates
When you need to buy or sell currency, to buy property abroad for example, the exchange rate can make a huge difference to the cost.
Getting the best exchange rates is paramount, as is timing your purchase. Often a property purchase or sale can take several months to complete, during which time your return could be severely affected by changes in the exchange rate.
If you need to buy or sell currency for any reason then it’s worth getting in touch with me to discuss your requirements. I can provide you a quote for you to compare with your bank or existing broker. I can also explain what is happening to the exchange rate including helping you decide when to fix a rate. Also, I have various tools and contract types to protect you against the market moving against you, and ensure you don’t get a worse rate than is necessary.
It’s free to make an enquiry, doesn’t obligate you in any way, and like thousands of clients that have contacted me through my blog, you could save thousands of pounds.
Labels: Euros, GBP/EUR, Interest Rates, Pound/Euro forecast, Sterling, when to buy currency