EDITOR’S NOTE: The British Pound has taken a beating after events in China distracted attention from Greece, making Spanish property dearer for buyers with capital in Sterling. Foreign currency exchange specialist Luke Trevail looks at the factors driving exchange rates, and what the future might hold.
The market has been rocked by so many factors this year it has all the makings of a Hollywood film. With so many unexpected twists and turns that it makes predicting and warning people of the peaks and troughs almost impossible.
August was a huge month. We started full of optimism that with the Greek situation finally behind us and the Euro’s fragility laid bare that rates of above €1.40 were here to stay. This belief was further helped by the Bank of England taking a firm stance that a hike of interest rates in the UK was going to happen and it was more a case of when, not if.
Then the Chinese stock market crash took hold. Black Monday will be remembered as the world’s second largest economy suffered massive financial losses and caused trillions of dollars to be wiped from global stock markets.
The knock on effect of this momentous day is that central banks across the world are re-evaluating their position with interest rates, so the Bank of England will almost certainly be forced to withdraw their hand and wait for the dust to settle. Rumours of more to come from Asia doesn’t help, and as I’ve written before the fickle pound does not like uncertainty.
As we try and shake the hangover of Black Monday Sterling has dropped heavily versus the single currency, losing nearly 6% in a fortnight. Those you looking to buy the Euro can still achieve in the mid €1.30s, and we can be hopeful of some reprieve soon, but with the powder keg of Asian market and the shocking stock stumble, the great fall of China may not be over just yet.