Currency exchange and Spanish property | foreign currency and property

The £ & € Exchange Rates – Where are we heading?….

17Th March 2009

The huge drop in exchange rates for the Pound against the Euro over the last week has followed on from what has been a very volatile period for the currency pair, making it very difficult to judge the best time to buy or sell.

The Bank of England minutes next week may go some way to determining whether the slide for Sterling will continue but the real risk to many people is the unscheduled news releases relating to banking or economic problems which may surprise the markets and cause them to swing in one direction or another. Currency markets have struggled to keep pace with world events and exchange rates have been far less predictable now than they have been for a number of years. 

When you look at Sterling movement in value when compared to the Euro and Dollar for previous months and years the level of variation is quite frankly frightening. Movement in the most stable, unpegged, currency pairings of over two percent in exchange values in one day was once rare but now commonplace and a large shift of nearly 30% Sterling/Euro and greater than 50% Sterling/Dollar in the last twelve months have redefined Sterling’s place in the economic order.
 
So why is the GBP struggling?

The recent slide appears predominantly to have been down to the markets assessment of Lloyds Bank creeping into state ownership, which has now reached 65%.  The British government has spent considerable time extolling the benefits of a Banking sector free of state and regulatory control to members of the Euro zone and this reversal has damaged the UK’s international standing and the value of sterling.Another UK bank in the headlines is Barclays who has stated that it is in talks with the Treasury over its "potential" participation in the government's Asset Protection Scheme. The bank said any decision on whether it would participate, "and to what extent", would be based on "the economic merits to shareholders".

The Asset Protection Scheme uses government money to insure banks' riskiest assets against further losses. Lloyds Banking Group and RBS are already signed up to the scheme. One of the points on the currency compass is economic conditions. This means that poor economic conditions in a country will negatively affect that country’s currency. Potentially this could prove negative for Sterling.  However, with the whole world in turmoil at the moment, any market movement is based on whether the news is better or worse than the expected value and how bad news releases are from other countries.All told foreign exchange doesn’t have to be difficult and it doesn’t have to be costly. For those that need to make international transfers it pays to shop around and look at the services offered by foreign currency exchange specialist. You might be pleasantly surprised –saving literally thousands on exchange rates and hundreds on transfer fees.  

Information provided by Currencies Direct, leading providers of foreign exchange.

Call to find out how we can help you get the best rates and save your transfer fees.

Contact the Costa del Sol office on 902 310 444 or email costadelsol@currenciesdirect.com. 

The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.