If you’re buying a property in Marbella, Euro Prestige know full well how important the exchange rate is. After all, a strong pound can add thousands to your euro total, dramatically cutting the cost of your Costa del Sol property. Given this, you’ll welcome the news that sterling has hit 1.37 versus the Eurozone’s common currency today, +17 cents higher than 21 months ago, back in January 2014.
Were you to transfer £250,000 to your Spanish bank account to buy a Marbella property, today’s favourable exchange rate means you’d get +€37,500 more than at the start of 2014. Clearly, this is a considerable sum, and means you’ll have to save less in order to purchase the Marbella property you’ve had your eye on. Moreover, the exchange rate may rise higher. Pure Fx are explaining 10 reasons why:
1. Sterling may rise, because UK unemployment fell to +5.4% in August. This is the least since the financial crisis in 2008, and close to what the Bank of England considers “full employment.”
2. The pound could climb, because Bank of England policymakers Ian McCafferty and Kirstin Forbes have both signalled this week that UK interest rates will have to rise sooner rather than later.
3. Sterling may strengthen, because the UK is on course to be one of the fastest-growing major economies in the world for the 3rd year running in 2015, forecasts the International Monetary Fund.
4. The pound could fly higher, because UK retail sales jumped +1.9% in September. This was far higher than the +0.3% forecast, and signals that shoppers will continue to fuel the UK economy.
5. Sterling may pick up, because the UK government borrowed just £9.4bn last month, the least for a September since 2007. This tells us that the Tories are bringing down the UK’s deficit.
6. The euro could weaken, because the European Central Bank signalled today that it’s ready to extend its emergency monetary stimulus scheme. This signals that the Eurozone is still weak.
7. The euro may drop, because confidence among European consumers unexpectedly dropped further than forecast this month. This may bring down the Eurozone’s economic growth.
8. The euro could lose out, because the Eurozone economy is vulnerable to the slowdown in emerging markets such as China and Latin America, says ECB chief Mario Draghi.
9. The euro may fall, because the Eurozone returned to deflation in September, with prices falling –0.1%. This raises the odds that Europe will succumb to Japan-like economic stagnation.
10. The euro could decline, because unemployment in the Eurozone remained above 10% in August. This means that millions of people are still jobless, cutting into Europe’s economic growth.
With all this in mind, there’s an excellent chance that the exchange rate will rise higher, further cutting the cost when buying in Spain!
By Peter Lavelle