EDITOR’S NOTE: The British pound has slumped somewhat against the euro since the summer, 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 currency market continue to keep us on our toes doesn’t it? The last three months has seen us bask in the glory of €1.44 and the shudder at the gory of €1.343 – the latter being earlier this week.
The picture moving forward is as always, hazy but the 10 cent swing in a short space of time should act as a warning to those who held off as they incorrectly proclaimed it’s ‘definitely heading to €1.50’.
The Bank of England that have acted as the catalyst behind the move, helped massively by the Chinese stock market crash in August, and the promise now that interest rates in the UK will remain as they are for the foreseeable future. It was long expected that the BoE would hike rates before the year end, but with global demand and the reverberations that an unsteady Chinese economy has policy makers in an understandably dovish position. This has pushed back expectations until mid year 2016 for interest rates to be looked at.
It’s not all doom and gloom for those of you that have missed the bus in the Summer however. €1.35 has become the new €1.40 and should be treated as such, but signs of an improvement after an almighty slump have filtered through with the eurozone slipping into deflation territory today. This has weighed on the single currency, and picked things up a touch from where we have been. For me, there is nervousness in the market that suggests that we’re never far away from another Euro crisis so watch this space but proceed with caution.
The market seems to be ruthless in its approach currently and those of you that need to buy euros in the short-term should look to protect themselves as the outlook is uncertain and we know what can happen if this turns on its heels against you. A question for you to ponder; How bad would you feel if we end the year as we started – at €1.25?
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