The Sliding Euro

[S_Monty]

OK, this is an appeal to all the economic brainboxes out there!

With the euro in a bit of a slide at the moment (getting close to €1.25 / £1), we can currently get the best deal on exchanging sterling for about 3 years. However, with the latest twists to the political landscape in Europe, (Greece & France in particular), the old never-ending eurozone problems may be set to get even worse.

So, what are your predictions on the € / £ rate over the coming months? Buy € now, or still hold out a bit?

[SAM SPARKLE]

Personally I wouldn’t hold out much longer, I changed a few bob this morning at 1.25 and am happy with that, but a word of caution - the UK economy is technically in a recession and the idea of further quantitative easing if the contraction proves deeper is still on the table. It would be naïve to think this rally could continue indefinitely and these rates that we haven't seen for months, may prove very attractive in the months ahead, some speculators are saying it could go as high as 1.30, and that may be the case, but unless you are changing very large amounts then I would change it up soon.

[joeysoap]

if anyone was thinking of buying (mad I know) this might be a good time.

[cereza]

Personally I wouldn’t hold out much longer, I changed a few bob this morning at 1.25 and am happy with that, but a word of caution - the UK economy is technically in a recession and the idea of further quantitative easing if the contraction proves deeper is still on the table. It would be naïve to think this rally could continue indefinitely and these rates that we haven't seen for months, may prove very attractive in the months ahead, some speculators are saying it could go as high as 1.30, and that may be the case, but unless you are changing very large amounts then I would change it up soon.

Fully agree. Sterling is being bought purely because it's not the Euro !
Take advantage of the current great rate and if it goes up to 1-30 then do some more

[roy4eyes]

Great for tourists but what is it going to do to property values for residents wanting to sell ?

[joeysoap]

Great for tourists but what is it going to do to property values for residents wanting to sell ?

I'd have though it would be a major help, if buyers have xxxx in sterling and you are selling in euro, the 'actual' prices might not be that far apart.

[joeysoap]

Great for tourists but what is it going to do to property values for residents wanting to sell ?

I'd have though it would be a major help, if buyers have xxxx in sterling and you are selling in euro, the 'actual' prices might not be that far apart. but of course you have now have euro. bank it and pray.

[sunman]

to be fair to Sterling it's not just strong against the Euro it's had a good run against most currencies, have a look at the US$, AUS$ & Yen over the past year, and despite its bad press this endorses the austerity program in my view

but I agree, nothing goes up in a straight line so buying some Euro's right now after a good run can't be a bad idea, even if it pushes on further

and in the long run; imagine a Euro without Greece, Portugal and maybe Spain, without that dead wood it's a case for the Euro to grow much stronger

villa prices? no change in Euro terms as obviously most European buyers are in the Euro; in practice the credit markets are still dire so the prospect of a sale is poor, and if you're selling to go into £'S then I'm afraid it's a double whammy on the downside, lower prices & less £'S for your money

I'm pleased for all my retired buddies drawing £ pensions, about time they had some welcome relief

[HampshireRich]

I've decided to bite the bullet and buy Euros now - got 1.213 at Travelex online. It may get better over the next few weeks but I cannot see the tourist exchange rate going above 1.25 - which may have saved me £35 but last year I held out too long and got a measley 1.08 to the pound.

I don't think there's a right or wrong time at the moment - just be lucky

[EMM]

The old adage applies, if you need to buy now. if you want to take a risk hold on to see if the pound gets stronger.
As for the property market we know of at least two Portuguese banks who are starting to lend to non residents.
As ever the conditions are based on ability to pay , but the rates are reasonable .
Some are based on Bank repossed properties which obviously they want to see a return on.

[widge]

in the long run; imagine a Euro without Greece, Portugal and maybe Spain, without that dead wood it's a case for the Euro to grow much stronger

Interesting perspective but surely the consequences of them leaving the Euro (presumably having defaulted on their debt) would leave an enormous burden on the remaining member countries?

[sunman]

in the long run; imagine a Euro without Greece, Portugal and maybe Spain, without that dead wood it's a case for the Euro to grow much stronger

Interesting perspective but surely the consequences of them leaving the Euro (presumably having defaulted on their debt) would leave an enormous burden on the remaining member countries?

this is an ever changing puzzle but if we accept that the Euro problem is now a global one then it's in the interests of the US & China as exporters that Euro economies remain strong and can therefore still buy their goods , so the expense of Greece, Portugal and maybe Spain exiting the Euro might be met by the IMF as much as Euro nations, and therefore the remaining countries would form a solid entity?

[widge]

Interesting perspective from competent economist.


"Those who not long ago were adamant that no country would leave the euro are now saying of course Greece may leave but, if it does, this would have no impact on the continued membership of the other countries. I think they are wrong.
Much would depend upon what happened in Greece. Initially, it would be a complete mess. And it is possible that it would descend from that into abject chaos and economic ruin, perhaps accompanied by hyper-inflation. After all, some countries do. Zimbabwe comes to mind. If that happened, throughout the union the advocates of austerity would be strengthened. In the peripheral countries there would be a widespread fear that if they did not buckle down they would "end up like Greece". It would serve as the hobgoblin of the eurozone, being used to frighten countries into swallowing their nasty medicine.

Suppose that within a year or so of exit, it looks as though the Greek economy is starting to recover. How then would the governments of Portugal, Spain, Ireland and Italy persuade their electorates that there is no alternative to austerity stretching out until the crack of doom? The game would be up.
What's more, the markets would know it. Bank deposits would flee from these countries and end up with German banks which, through the Bundesbank, would recycle them to beleaguered banks in the periphery. In the process, Germany and the other northern countries could end up taking on the risk of the whole banking system of peripheral Europe.
I reckon that well before that stage, either the ECB or the Germans would say "enough". At that point, staring a banking collapse in the face, the peripheral countries would have no choice but to fund their banks by issuing their own money – i.e. leaving the eurozone."

[cereza]

If the Euro were to break up then the weaker countries would revert to a competitive currency but what about Germany? - the Mark would revalue upward drastically causing huge problems for the German economy and for this reason the continuation of the Euro is very much in Germany's interest.
With the recent elections in Greece,France and Westphalia indicating the desire for an ease in austerity don't be surprised to see Mrs Merkel or George Osborne introducing some new growth policies after Greece's departure despite their current denials.
If Greece did leave the Euro then the Germans would have to defend the other peripheral countries and loosen up on the austerity policy. On top of that if the UK economy continues to stagnate then don't be surprised to see the BOE print even more money
Sterling continues to attract buyers as a safe haven with Gilt values now very low but just how long can this continue? If you take the Bond rates for the US, Germany and the UK they are so low that buyers are actually guaranteed to lose money when inflation is taken into account - in other words investors are so scared that they prefer to buy these as the least dangerous investments ie they will lose less on these than they would in any other investment The current rate of 1-25 Euros to the Pound is excellent and if anyone needs to change up then I can't see any reason to risk hanging on waiting for better. Yes it could go to 1-30 - anything is possible - but it seems a very high rate to start buying for speculation.

[EMM]

Interesting new slant on the decline in the Euro.
The sunday times has an article about the negative effect on Brits who want to sell and move back to the UK headline " Expats rush to sell up to flee Euro crisis "
After a few years of complaining about the decline in sterling we now see Brits abroad complaining when it moves the other way.
As far as Portugal is concerned for all who think things are worse the same article reports that 39% of UK propery owners in Greece are trying to sell, 34% in Spain but only 15% in Portugal.
This is one of the lowest as in other Eurozone countries the average is 23%.
The final paragraph in the article suggests that now is the time to buy if you have strong nerves as the stronger £ gives you more buying power !!