Where could this be heading in the longer term, and what could you be faced with?
There have been increasing concerns that the Government’s plans to stimulate growth through tax cuts may negatively impact the economy longer term, weakening sentiment in the currency. This has placed pressure on the Bank of England to intervene to prevent the currency from falling further by increasing interest rates in the UK, but longer term, this could significantly impact the UK mortgage market and further fuel the cost of living crisis.
In essence, it’s been widely reported that the government's mini-budget could counter the Central Bank’s measures and visa versa, creating the potential for the Pound to weaken further in the longer term.
From a Euro perspective, the currency has seen significant weakness with the ongoing conflict in Ukraine, whilst oil and gas supply to the region has been restricted. The recently reported sabotage of the Russian/German oil line could further intensify the conflict, and the Euro could weaken further as a result.
In the current political and economic climate, significant downside risk exists that could weaken both the Pound and Euro over the coming months, and there are arguably fewer factors that could provide improvements to Pound and Euro exchange rates.
Why should you consider the exchange rate early in the process of purchasing a property abroad? And how can you best manage it?
When purchasing property overseas, considering exchange rates early in the process can be crucial, as a specialist can help review budgets and offer guidance to understand the true cost of that property when considering live exchange rates.
It’s also important not to panic even when exchange rates are volatile, try to avoid focusing on any specific exchange rate at any one time and speculating on the market.
Contact a specialist in international payments and let them demonstrate significant value to you and give you peace of mind around the process. Experience working with these transactions can ensure everything goes as smoothly as possible.
If markets are volatile and an offer is being considered or has been placed, we can help assess when might be suitable to exchange funds against the timeframe before completion, and in some cases, it may make sense to fix a rate once the offer is accepted, to remove further risk and protect the cost of the property.”
Last 6 Months GBP/EUR
High - 1.2106
Low - 1.0855
Average - 1.1480
Current (06/10/22 10:00gmt) - 1.1421
Last 6 Months EUR/USD
High - 1.1149
Low - 0.9536
Average - 1.0342
Current (06/10/22 10:00gmt) - 0.9895
The key takeaways are:
- The US Dollar is still close to all-time highs against the Pound and Euro.
- The GBP has recovered over 5.5% against the Euro and US Dollar in the last week.
- GBP/EUR rates are back around the average since the referendum in 2016.
When considering the broader picture, it's a very different scenario, and that's where specialist guidance can ensure buyers are comfortable with the price they are paying.
The exchange rates are a significant consideration when making a purchase be it a home car clothing food or any product manufactured in a domain with different currencies. The exchange rates need to be considered a variable contributing to the ultimate cost of that product or service will be purchased . When the exchange rates are in your favor the exchange rate can be a deciding factor in how much can be spent and in this instance moving to Spain