Up and down it goes; where it stops nobody knows…….
The recent downgrade of the UK’s AAA credit rating by Moody’s has brought home to many investors the importance of exchange rate fluctuations when buying a French property.
Sterling has continued to experience difficulties since the beginning of the year and is now at a low of €1.1489.
Sterling had started February with a rally to reach €1.1817 on 10th February; however this was followed by the largest one day drop for almost three years when it fell by 1.8% on speculation of the currency downgrade.
Deteriorating economic figures and growing political uncertainty have contributed to an 8% decline of Sterling against the Euro in 2013 and added to the concerns of those seeking to buy property abroad.
On the horizon however, there are concerns about the Italian election results along with the probability of the European debt crisis being reignited; this could cause a reversal in the recent Euro strength.
Lower exchange rates may be good for British exports and economic recovery, they do not bode well however for property investment abroad. The fact that the Bank of England has decided to reject any further stimulus this time around in terms of its quantitative easing program, will hopefully halt the slide in Sterling over the short term.