Tuesday, 22 December 2015

Pound/Euro falls to €1.35

Sterling/Euro rates have failed to recover their recent fall, and today have continued to drop and currently sit in the low €1.35's. This morning figures showed that government borrowing was much worse than expected, and this means that it's less likely the Chancellor will meet forecasts for this year. The below graph shows how GBP/EUR has moved so far in December:


As you can see, the decline started early in the month when the European Central Bank confirmed they are increasing stimulus measures, which should have the effect of returning the Eurozone to growth. This has strengthened the Euro and is making it more and more expensive.

Here in the UK, the wind has really been taken out of the Pound's sails. Much of the driving force behind Sterling's strength was down to an expected interest rate hike. This is now unlikely until 2017 so the Pound has dropped off.

As we head into 2016, I think the focus will start to turn to the UK EU referendum. The uncertainty this is likely to generate could mean a further period of Sterling weakness and volatility.

In the last 3 weeks a €300,000.00 property abroad has become £12,000 more expensive due to exchange rate movements alone. Regular readers that chose to make an enquiry and fix rates while they were at the peak did well to head warnings the rate could drop, and have saved a significant amount of money. Even if you still need to buy Euros, then there are actions you can take to ensure you don't get a worse rate than necessary... 

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