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November brought with it a number of key market moving events for Sterling exchange rates. Firstly, the Bank of England decided to raise interest rates to from 0.25% to 0.5%. Although this would usually be well received by the markets, the Pound actually weakened significantly following this announcement. The reason behind this was that the commentary from Governor Mark Carney painted a bleak outlook for the UK economy, and instead of suggesting that interest rates would steadily climb over the years ahead, which had been widely expected, he suggested there may only be two further hikes over the next 3 years.
Another key event followed towards the end of the month when Chancellor of the Exchequer Philip Hammond delivered the Budget.
This did little to lighten the mood for Sterling, with the main disappointment being caused by the downwards revisions of UK growth forecasts for the years ahead.
GBP/EUR exchange rates in November
GBP/EUR interbank exchange rates fluctuated by over 3% during the course of November. This equates to an additional €7,000 on a £200,000 transfer for those buying in France, or an additional £5,500 on a €200,000 transfer when selling to move back to the UK, if the transfer was timed at the peaks of the month. This just highlights the importance of being in touch with a currency broker to alert you as these spikes occur.
Although December may appear to be a quiet month with Christmas festivities being the focus for many, this is certainly not the case for the currency markets. The topic of Brexit is really heating up now, and in just over 2 weeks’ time on 14th-15th December, all 27 EU leaders will meet to discuss whether the UK can move on to the second stage of negotiations - trade talks. Many topics need to be addressed and decided before this can happen, including an agreement on the amount the UK will pay for the Brexit “divorce”, as well as coming to a decision on the Irish border dispute.
Also on 14th December, the Bank of England will meet to deliver their decision on any changes to the UK’s interest rate, and although no change is expected, the minutes following this usually creates volatility for GBP/EUR exchange rates.
Please note that exchange rates quoted within this report are interbank rates of exchange. These are used to give an accurate picture of the market but unfortunately these are not dealing levels.
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The Pound has made considerable gains over the course of October, and Interbank levels are currently sitting at the highest levels seen since the end of September. This has meant an additional €7,500 on a £250,000 transfer when trading now compared to the lows of the month.
There are three main factors behind this excellent run for the Pound:
Firstly, since Bank of England Governor Mark Carney hinted towards the possibility of an Interest Rate hike at their next decision meeting in November, investors have reacted exceptionally well to this positivity.
Secondly, although at their latest meeting at the end of October the European Central Bank decided to decrease its monetary stimulus, seen as a positive sign for the European economy, it was the comments which followed by ECB President Mario Draghi that knocked investor confidence in the Euro. He said that Interest Rates would be kept on hold until far beyond the end of their stimulus programme, which is now set to run until at least September 2018, and they will be quick to increase stimulus once again if the economy shows any signs of weakening. All in all, this spooked investors who moved their funds out of the Euro, and into the Pound and US Dollar – therefore weakening the Euro.
Lastly, the ongoing situation regarding Catalonia has heaped further pressure on the Euro. Spain are struggling to contain Catalonia’s push for independence, and although this isn’t something which is likely to be granted, uncertainty of any kind can usually be detrimental to the currency in question.
The main event to watch out for now is this Thursday 2/11 where members of the Monetary Policy Committee will decide on whether to raise UK Interest Rates. One of the latest polls showed that there is an 84% chance that the bank will raise rates by 0.25%, bringing UK Interest Rates to 0.5%. However, as this is widely expected and therefore likely to already be priced to current exchange rates, if the bank either decide to keep rates on hold, or don’t raise by the expected 0.25%, we could see substantial losses for the Pound.
I would recommend any clients looking to buy or sell in France in the near future to get in touch, so that we can help you to put a plan in place for your future currency transfer. We can be your eyes and ears on the market during volatile periods such as these, and could save you thousands on your currency transfers by helping you to trade as any spikes occur.
Written by Amelia Spencer, Affiliate Relationship Manager at Foreign Currency Direct
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And how will it affect us........ Foreign Currency Direct's Amelia Spencer gives us her view on what could happen and why when the Governor of the Bank of England meets with his colleagues in November to discuss whether or not to raise the interest rate, and what you might be able to do to mitigate any possible losses.
The Pound received a major boost towards the end of September, following from numerous hints from the Bank of England that an increase in Interest Rates in the UK could be seen as early as November. This has meant that interbank GBP/EUR rates have fluctuated by over 5% over the course of September, and clients purchasing Euros have potentially saved themselves over £9,000 on a €200,000 purchase if timed at the highest point of the month.
The general consensus is that there is a 50% chance of a rate hike at the next Bank of England Interest Rate meeting in November, however this is purely based on indications from Governor Mark Carney, rather than concrete facts. If October brings a wave of poor UK economic data and/or the bank decide to keep rates on hold, we could see Sterling drop back down to the near 10 year lows witnessed just a month ago. If, however, the bank do decide to raise rates in November, this could create further losses for clients selling properties to repatriate their funds back to the UK. Add into the equation the ongoing topic of Brexit negotiations, which are still hanging in the balance, the next month could prove a particularly volatile one for both buyers and sellers alike.
Here at Foreign Currency Direct, our team of helpful traders have an average tenure of over 8 years and are perfectly positioned to help you to time your transfer to help you to get the most for your money. One option available to our clients is to secure your currency through the use of a Forward Contract, which allows you to book the whole amount required at today’s exchange rate, for just a small deposit.
If you would like to hear more about how we can help with transferring currency for buying or selling a French property, or for any other currency requirements, please click here to open a free, no obligation account with us, and a member of our team will be in touch.
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Last weekend I planted more bulbs and corms - I say that because every year I plant hundreds. We have been here almost three years now so this is year three of the current bulb planting regime and the pattern is something like this.
Year One: plant a moderate amount of what you like where you would like them to be.
During Year One - watch how they flower and whether they really do live up to expectations. If you have bought bulbs and corms of reasonable quality then they almost always put on a fantastic display in that first year, because, basically, you have planted ready packed flowers.
Year Two: be a bit more experimental and plant something different, somewhere else.
During Year Two - watch how Year Two's bulbs flower BUT ALSO observe how Year One's bulbs have got one...do they come back in profusion in the second year or are they dwindling.
Year Three (i.e. me, this year): Increase the planting of the Year One bulbs which thrived, plus try a few more adventurous bulbs.
During Year Three.....well you get the picture.
In this way, supplemented by bulbs' natural tendency to spread if they are happy, you build up a carpet of contented plants which look after themselves for years to come. But first....
Bulbs and corms in a nutshell, as it were.
Bulbs and corms differ in how they store the food photosynthesised in the leaves. Bulbs are basically the swollen bases of the previous year's leaves with the embryo of the next year's flower hidden in the middle. Each year the changing seasons trigger the development of new leaves and flowers and the plant may also reproduce vegetatively by developing new baby bulblets at the side.
Crocus corms ready for planting
Corms are slightly different in that they are swollen underground sections of the plant stem. Each year a new corm develops above last year's corm and you can also get secondary corms developing, again as the plants reproduce vegetatively. This is why it is so important not to remove the leaves of bulbs and corms until they have died back naturally. They need to have the maximum opportunity to store reserves of food for the following year. If they do not get this they can shrivel and die. You can also help the following year's bulbs develop by feeding them with a sprinkling of bone meal after the flowers, but not the leaves, have died back.
In Year One here I planted daffodils at the bottom of the garden - they are not doing brilliantly, despite the region being renowned for its wild daffodils. I think the area I chose may be too dry, so none have been planted there this year while I watch the progress of those already in situ for a bit longer. I had planted Narcissus obvallaris, which is found growing in the wild in the UK and which resembled the wild daffodils growing locally, so I am disappointed at their performance, but maybe they take a few years to establish or maybe that particular corner of the garden is simply too hostile.
I also planted Crocus Tommasinianus (this is a corm, not a bulb); a crocus which naturalises fantastically well in grass or borders if it is happy - and it is flourishing here, so last week I planted another 100 of them.
Crocus tommasinianus naturalised in grass - year one.
I also planted Muscari armeniacum, or grape hyacinths. These are doing so well they promise to become a menace, so I have bought another 100 of those too. They will be planted differently however - the crocus is planned to develop into drifts of purple which will flower under deciduous trees each February, while the Muscari will be dotted in little groups around the borders to act as accents of colour in early spring. The experimental thing I am planting this year is a small daffodil called Narcissus tete-a-tete. This will be planted like the Muscari in small clumps dotted under deciduous trees in a bed which hosts shade loving plants for most of the year. I will see how it does compared to the daffodils planted in year one.
Year One also saw me planting Eranthys hyemalis, the yellow flowering winter aconite. This is best not planted at this time of year, when it is a dormant bulb, but in January/February when it has leaves on it ( known as 'in the green'). It did well last year and if it comes up again this winter I shall order some more shortly after Christmas. The other bulb/corm I plant in the green is the snowdrop and Cyclamen hederifolium. I planted these in Year Two, so will watch to see how they do this year and if they prosper will add to the collection. Cyclamen, snowdrops and aconites are wonderful and deserve a blog of their own, which I will try to remember to write in January/February.
This year's experimental planting was to have been Martagon lilies, but I spent so long wondering which one to get that by the time I went to my bulb supplier they had sold out......a lesson learned and a year's growth wasted.
The other thing I always plant is the tulip. My personal favourites are Apricot Parrot, Spring Green, Greenland and Princess Irene but there are hundreds of varieties to choose from and it is worth experimenting. In year one they go into pots. Then I either leave the leaves to die back then take the bulbs out of the pots and keep them dry until about now when they go into the ground somewhere in the garden or I un-pot them as soon as they have flowered and transfer the clump straight into the ground. Year two is a bit pot luck, as it were, and sometimes they work and sometimes they don't, but it is always fun and there is always next year when I can try something new.....
Tulips 'Spring Green' and 'Apricot Parrot' together with lily of the valley.
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Today we have received a Brexit update from France Property Guide which we want to share. This is what they said:
This week the European Union (EU) formally established its desire to guarantee the basic rights of British citizens living in the EU. So long as the UK agrees to protect the rights of EU citizens living in Britain, as Theresa May has repeatedly said she will, then we should be okay to continue looking to buy a home and live in France without the need for visas or other restrictions for the foreseeable future.
In its directive, the in all future negotiations because there are so many people affected by Brexit. It seems that citizens’ rights are right at the top of the agenda when it comes to general future discussions and the EU also states that the rights should be reciprocal between British people and citizens of the EU’s 27 other member states.
In particular they say that the status and rights from EU law at the time of Britain withdrawing from the EU (proposed for March 2019) should be protected, including rights to pensions and healthcare. They suggest that the rights should include residence in their adopted country including access to healthcare and social security plus education and training to be available just as it is for nationals.
While no deal between the UK and the EU will be a done deal until everything is finally signed and the ink is dry - which could be a very long time, it is good new to see that not only is the EU is putting citizens concerns at the top of the agenda, but also that they are suggesting that should you buy a house in France before the UK leaves the EU in March 2019 your rights to live in the EU will be permanently protected.
So come on buyers - now is the time to make the move. The sun is shining and French property is very attractively priced. Register with us and we will send you weekly details of new listings as well as any price reductions which have taken place. What are you waiting for?