How will the Pound fare up to Easter?

Our partners at Smart Currency Exchange give us their take on the next few months:

Smart Currency Exchange has released its latest forecasts, where we combine the forecasts from several leading financial institutions and explain the factors that will affect the value of the pound against the euro (GBP/EUR) in the months ahead.

It takes estimates from several global financial institutions:

What should become immediately clear is that there are vast differences in the predictions for the GBP/EUR over the coming year. According to the experts, by Easter a pound might buy you anything from €1.06 to nearly €1.20. That means that a €200,000 property you buy in late March could cost you anywhere from £166,900 to £188,000.

For property buyers in France, that £21,100 potential loss (it may, of course, be more) could spell disaster if they are already within the buying process. If you put down a deposit on a property at €1.14 and by the time you complete the rate has moved to say €1.07, as it did in spring and summer 2017, you could be liable to either pay the difference or pull out and lose your deposit (and your dreams of life in France).

The good news is that you don’t need to take that risk.

But before we explain how to avoid it, what factors could change the rate?

They include both political and economic risks:

• Phase Two of Brexit talks beginning.
• The European Council Summit in March should give an idea of the future trade deal between the UK and the EU
• Will the UK economy continue to hold its own?
• How will increased interest rates affect the gap between inflation and wage growth?
• The reduction of the European Central Bank's quantitative easing programme
• Coalition talks for the German government
• The Italian general election in March 2018
• Will populism rise across Europe?

What we do want to get across, however, is that no-one really knows anything!

As our founder and managing director Charles Purdy says: “In our years of working in the foreign exchange industry, we have learned that, despite what anybody might claim, nobody knows what is going to happen to any given currency pairing from one day to the next. There is no crystal ball to consult. We are often asked what is going to happen to the euro or US dollar six months from now and we hold our hands up – we don’t know and neither does anyone else.” What we can do, however, is help you manage the risk.

The safest response to currency volatility is simply to protect your budget via a forward contract or one of the other tools at Smart Currency Exchange’s disposal.

Give Smart a call today to discuss risk management of your property budget.