Thursday, 28 January 2010

Thursday, 28 January 2010

More on the £ / € situation

The year has started better for UK ex-Pats as the £ rises to recent highs against the Euro, making a significant difference to those on fixed income, such as pensions. As I write this article, the £ is trading in excess of 1.16 versus the Euro. It is effectively the Euro that is weak though, since both the Pound and US Dollar have managed to make headway against the currency. We have to conclude that fears over the economies of Portugal, Spain. Italy and Greece are weighing heavily on the Euro. Greece has received a lot of headlines over their faltering economy, but Portugal is slipping in the same direction as Greece in terms of its government finances and they will need to address this in their forthcoming budget on a domestic level. This is especially so igiven the distance French and also German figures are placing between their countries and the problems that Greece is facing. Not such a cosy club now it seems ! Sterling remains at the very top of its recent ranges with the Pound buying more Euros, Canadian Dollars and Australasian dollars than it has for 5 months. However, these levels are looking less and less secure and the charts are posting increasingly overbought signals against the Pound so those with Sterling who haven’t already swapped some of their funds for another currency should think about doing so urgently. At times like this rates are stting on a precarious knife edge and go either way so if you are risk averse, then you should have a more detailed conversation with our dedicated dealers to determine how these moves may save or cost you money and what you can do about it. What does this mean for house prices? Well, the cost of buying a French house has become cheaper for a UK buyer, with a 250,000 Euro house costing £215,815 today, as against ove £224,000 both 1 and 3 months ago. Given that French property prices have fallen since 2008, I am very much of the opinion that today represents a great buying opportunity for UK buyers, with relatively low prices and a favourable exchange rate. Some of our vendors are ex-Pats who are returning to the UK, for various reasons. They now face a difficult decision, since whilst the £ has been weakening throughout 2008 & 2009, they have been able to reduce their prices, secure in the knowlegde that they would gain on the exchange rate and be able to buy in a weak UK property market. The emphasis has now shifted, as the UK market strengthens and the Euro weakens against the Pound.
Peter Elias (Agent Commercial)
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