Now Could Be A Good Time To Buy Property In Eurozone
A combination of depressed property prices and an exchange rate in favour of anyone
transferring pounds to euros means opportunities to pick up bargains in the Eurozone, including Spain, France, Portugal, Cyprus and Italy, havent been so good for a long time, according to the Overseas Guides Company.The euro has fallen in value against the UK pound following last weekends election results in France and Greece, reducing the cost of buying property in the Eurozone for UK-based nationals.
The outcome of the elections has cast doubt on European austerity plans placing further pressure on the struggling single currency, which could depreciate further against sterling in the coming weeks.
Concerns about the stability of Eurozone economies caused by recent elections in France and Greece helped the pound reach a three-and-a-half year high against the euro when the rate hit 1/1.24 earlier this week, said Richard Way, editor of The Overseas Guides Company. Add to that the fact that prices in many destinations are at the lowest theyve been since the market peak of 2007 and its easy to see why today is well and truly a buyers market for Brits."
UKForex commentary
Euro:
Sterling traded to a fresh 3-1/2 year high against the euro yesterday as EUR/USD broke below the psychologically important 1.3000 level on the way to a 3-month low of 1.2912. Political developments, or lack of, in Greece remained a reason to sell the euro on Wednesday as the leader of the Syriza party, Alexi Tsipras, failed to form a government thereby making another round of elections in June look very likely. Market chatter that Eurozone governments were going to withhold a EUR 5 billion aid payment to Greece due to the ongoing political uncertainty only served to add to the bearish sentiment towards the 17-nation currency union on the day. Spain also came back into the markets crosshairs as concerns surrounding the solvency of the nations banking institutions resurfaced which lead Spanish 10-year bonds to trade above the important 6% level and the nations Credit Default Swaps rose to a record high. Overnight GBP/EUR traded to a high of 1.2493, the highest level the pound has traded against the euro since the start of November 2008 and we expect that GBP will remain bid today ahead of the Bank of England interest rate announcement. We along with the majority of other market participants see no change in policy from the central bank today which is likely to be a viewed as a GBP-positive by the market and combined with the current safe haven facet to the UK currency we could well see 1.2500 in GBP/EUR today. It appears that the game is changing with respect to Greece, with the once taboo subject of a Greek euro exit now being openly and candidly discussed by EU officials and with this in mind it could just be the beginning of some very steep losses for the single currency. GBP/EUR opens this morning at 1.2440.
United States Dollar:
GBP outperformance was notable in the FX markets on Wednesday, as sterling approached a near three-year trade weighted high against a basket of other currencies. The key exception was the pounds performance against the USD, as cable traded to a two-week low of 1.6066 after EUR/USD broke below significant support at 1.2950. The pound was initially hindered by some poor economic data released during the previous session, in particular a very soft BRC retail sales figure did little to support the notion of a buoyant UK high street. GBP/USD did recover most of its losses as the day wore on, a consequence of a well-supported pound on the crosses and a slight recovery in market risk appetite but gains were capped as events in Europe left investors wary of wading into any excessively risky positions. Broad price action in the greenback continued to be dominated by safe haven flows and this was to be expected given the lack of meaningful US economic data on the day. Today is all about the Bank of England interest rate decision at noon, although with most players positioning for no change in monetary policy it is likely to be a non-event. Should the bank keep QE on hold it is likely that there will be an initial push higher in cable but safe haven demand for the USD should mean that gains beyond 1.6200 in the pair will be limited. Data from the US today includes Marchs trade balance number and weekly jobless claims, with the latter likely to be the primary focus for investors. GBP/USD opens this morning at 1.6100.
Aussie and Kiwi Dollars:
Significant safe haven positioning and a decline in the value of gold pushed the commodity currencies lower against the USD yesterday as investor focus remained fixed on the worrying developments in Europe. AUD/USD and NZD/USD fell to fresh multi-month lows of 1.0018 and 0.7810 respectively as players bid up the greenback in size and subsequently the sterling crosses continued their recent run of form with GBP/AUD trading to 1.6061, the pairs highest level since October 2011 and GBP/NZD hit a 5-month high at 2.0591. These moves were as much a function of broad pound strength as prevailing commodity currency weakness. Overnight both the AUD and NZD have recovered off their recent lows on the back of some profit taking and economic releases have also been supportive of the higher yielding currencies also, with the April Australian jobless rate unexpectedly falling to a 12-month low. That said we expect the bounce higher in the AUD and NZD to be shortlived in this risk averse environment and favour further gains in both GBP/AUD and GBP/NZD in the coming days. GBP/AUD and GBP/NZD open this morning at 1.5961 and 2.0480 respectively.
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