Pound expected to strengthen against Euro

If you have savings in Euros, now might be a good time to get back into Pounds

In collaboration with TorFX

The Euro Debt crisis continues to make the headlines as the single currency struggles to claw back any gains following the damaging reports and data released from Italy, Greece, Spain, Portugal, Belgium – the list goes on.

With France at risk of losing its ‘triple A’ credit rating and rumours of Greece withdrawing all together from the euro-zone, continued weakening of the euro currency is likely.

Brief respite came last weekend after reports in an Italian newspaper suggested that the IMF was preparing an aid package for Italy which, if true, could give some breathing space over the next 18 months as €600 billion is to be made available.

Deeper cracks in the Euro are expected, however, over the coming weeks as the next European summit is due at the beginning of December, this follows the news last week that Belgium, Portugal and Spain had their credit rating slashed and further sufferings from the European Debt Crisis were felt in Germany as they unsuccessfully tried to auction a quantity of bonds.

Still time to sell Euros below €1.20, but for how long?

Market buyers are looking to off load the Euro in a bid to protect themselves against further falls, putting more downward pressure on the Euro. That should lead to a stronger Pound against the Euro, as the pound enjoys somewhat of a recovery due partly to a shift in focus away from its own woes. But anyone buying Sterling today will still get rates of below €1.20 (0.8333) so there is still a window of opportunity for buyers.

Any Spanish residents who are looking at repatriating funds will be well placed to move sooner rather than later as it seems that the historically resilient Euro is showing some clear signs of weakness the likes of which, thus far in the world recession we haven’t seen before.

Many market analysts are predicting that 2012 will see a significant shift in the fortunes of the Euro, with €1.25 being suggested as an average mid-market price throughout next year.

This has important implications for British vendors hoping to repatriate equity to the UK after selling their homes in Spain. If the Euro does weaken as expected against the Pound, it might be better to reduce asking prices now to make a sale, rather than wait and get caught between a falling Euro and falling property prices.

British house-hunters in Spain in better position

The other side of the coin is increasingly cheap Euros for those with Pounds Sterling. The Euro weakness makes a refreshing change for potential buyers in Spain, and the days of €1.12 to the Pound (or below) are likely gone for the foreseeable future. If property prices continue falling, and the Euro loses ground to the Pound, Spanish property will look increasingly attractive to British buyers with funds in Sterling.

But volatility (big short-term swings) will play a huge factor in the markets moving forward, so be sure to consult a specialist currency broker before you buy or sell foreign currency.

Do you need to buy or sell foreign currency? Get a free quote from specialist currency brokers TorFX. I use them myself.

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One thought on “Pound expected to strengthen against Euro”

  1. Chris Nation

    If by ‘consult a specialist currency broker’ the question would be, “stick or twist?” the honest answer is, “I don’t know”, followed by, “do what you have to when you have to.”

    My mate French Franck is a back-room number-cruncher for Credit Agricole. When I asked him why GBP had dived from Eu 1.60-odd in ’01 to levels below Eu 1.10 back-along, his answer was, “I don’ know. Nobody know.” An economist but an honest one.

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About Mark Stücklin

Mark Stücklin is a Barcelona-based property market analyst and consultant, and author of the 'Spanish Property Doctor' column in the Sunday Times (2005 - 2008). He can be reached by email on ms@spanishpropertyinsight.com.