The Eurozone has been out of the spotlight following the UKs vote to leave the EU, but problems are once again coming to the surface and the UKs exit is another spanner in the works.
Since the UK public decided to vote out of the EU, GBPEUR exchange rates have dropped from the 1.31s to the 1.17s. For clients that have sold property in Europe and are holding onto Euros its key to note €200,000 into Sterling now compared to pre-Referendum makes you an extra £18,000. It’s common knowledge that the UK has a tricky 12 months ahead however the Eurozone has problems of its own.
Interest rates within the Eurozone are at record lows of 0% and the European Central Bank have been injecting €80bn each month for the last year and a half to help stimulate the economy and improve inflation. The bad news for Euro sellers is inflation numbers have not improved and increased towards the target of 2%. Therefore within the next couple of months. If inflation doesn’t improve I wouldn’t be surprised to see the Q.E programme extended and therefore selling Euros to buy Sterling could drift away from the 3 year highs we are experiencing presently.
In addition the Greek debt crisis bubbles away in the background and could surface at any point, the Italian banking sector continues to struggle and if the UK do decide to invoke Article 50, could this lead to other countries following suit? The question I am asking clients now, ‘is it worth gambling for an extra couple of cents after the gains you have seen within the last two and a half months?
If you are selling Euros you do have different options that will protect your position. For example limit orders and stop losses can help you target a rate but at the same time protect you from major falls. Feel free to call the trading floor today on 01494 725 353 to talk to an experienced dealer who can help you formulate a strategy.
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