It was rather like déjà vu yesterday as the pound continued to weaken, hitting fresh seven-year lows against the dollar and a 16 month low against the euro. With very little high tier data out yesterday, this move was entirely sentiment driven.
Currencies are valued against one another and, therefore, the performance of a currency signifies relative strength or weakness against another currency. At the moment, the UK economy is getting a lot of negative press, so investors in sterling are looking at it as a bad bet. UK Interest rates are very much on hold, growth figures have been revised down, interest rate cuts are potentially on the horizon, not to mention the EU referendum on the 23rd June.
Christine Lagarde, the head of the International Monetary Fund, weighed in yesterday and urged the UK to remain part of the EU, warning that both would suffer through a diminishment of trade, financial ties and transparency on migration.
Boris Johnson is the latest conservative big hitter to join the ‘Out Campaign’. With this move comes more uncertainty over the UKs membership in the EU and thus we have seen the pound react accordingly.
With June 23rd rapidly approaching, we are expecting a period of heightened volatility on GBP/EUR rates, are you prepared to gamble on the cost of your French property purchase?
Exchange rate risk
Sterling has lost over 10% in value in the last 3 months, but not just due to EU referendum uncertainty. We are being asked on a daily basis by our clients if the rates will rebound and the honest answer is that we a very unsure. A lot of our clients at FC Exchange are buying property in France and want to be able to budget, and know exactly what they are paying for their dream French property. One option for clients who are looking to avoid any exchange rate risk and uncertainly is to lock in their exchange rate with a Forward Contract. A forward contract with FC Exchange means you can fix an exchange rate for up to two years in advance, so you’ll know exactly how much money you’ll receive when making your final payment to France. This completely eliminates any uncertainty, gives you full peace of mind the rate is locked in and that the property can’t get any more expensive.
If you are concerned about the recent drop in GBP/EUR exchange rates, Terra France can arrange a currency consultation with their dedicated currency exchange partner who has been assisting clients buying in France for many year and is very much aware of the buying process. He can help answer any currency related questions, as well as helping with the process of safely and securely moving your funds overseas at a great exchange rate.
Contact Sam Edmanson on 020 7989 0000 or firstname.lastname@example.org or register for a no obligation, free of charge trading account at https://secure.fcexchange.co.uk/register/personal
Also published on Medium.