Sterling continues to gain fground against most major currencies - Great news for those with upcoming transfers

Sterling has continued its long awaitied recovery against a basket of major currencies today, with a flurry of data released being better than expected.

The Consumer Price Index and Retail Price Index came out a lot better than expected which offers another possible set of 'green shoots' for the U.K economy.

Investors can only gain more confidence in the Pound following this data, hence the fact we have seen early morning gains against the U.S Dollar, Australian Dollar, the Euro and most major currencies.

Many of my clients will be pleased to see this, especially those with ongoing building projects abroad or pension/regular payments to make overseas as the past few months must have been nothing short of a nightmare when edging close to parity against the Euro and hitting the mid 1.30s against the USD whilst slipping below the 2 mark against the AUD for the first time in years.

Confidence back in the U.K - Time to look for that dream home again??

Daniel Wright - Trading Floor Manager at Foreign Currency Direct

Now may be the time to consider looking for that dream home abroad again as a report released overnight by the NIESR (National Institute Of Economic Research) suggesting that the U.K may well be close to seeing the end of the recession already!!

Sterling is already heading towards the 1.20 mark at a rapid pace against the Euro which is great news, for either those of you already living overseas that may have building work or general upkeep to do on their properties or even those that have moved abroad and have pensions forwarded over that have recently seen the amount received in Euros on a monthly basis tumble.

Should you have any questions or queries regarding this post please do not hesitate to contact me on either on 0800 328 5884 or by emailing me at djw@currencies.co.uk

The Tide is Turning Claim the Experts

The Tide is Turning Claim the Experts

WATCH OUT! THERE’S A BUYER ABOUT

Mike Walsh

The steadily rising pound against the euro has got more than Spain’s ex-pat community licking their lips in anticipation. The UK’s property speculators are finally getting their wallets out.

If the pound’s value continues to rise; and the consensus of informed opinion believes it will, sellers on the Costas will find more viewers. The downside is that they will not get as many pounds sterling … if they are converting.

Estate agents and foreign exchange providers are experiencing a revival of interest from those interested in buying properties abroad. The most popular locations are Spain, France, Italy and Portugal. Conti Financial Services say enquiries have jumped by 20 per-cent in recent weeks.

THE PERFECT STORM

Michael McLaughlin of Southern Comfit International says the reversal was quite predictable. “When the pound was falling to near parity reluctance to buy was perfectly understandable. The situation is now reversed and the ‘tanking’ of property prices have combined to create the perfect storm.”

The UK pound’s seemingly inexorable rise has also reversed the trend in which European property buyers preferred buying into the UK market. The tide has turned in favour of those selling and buying along Spain’s Mediterranean coastlines.

Currencies Direct, Mark O’Sullivan, the group’s director of dealing says, “We have seen a dramatic increase in the amount of money entering the international property market.”

SPAIN OFFERS MORE FOR LESS

Is the value difference between the UK improving? Michael McLaughlin thinks so. “In truth Spain has always offered more for less than has the UK. It isn’t back of the envelope accountancy to say you get twice as much for your money in Spain as you do in England; with other advantages added.”

The more pragmatic buyers appreciate that whilst the value of the pound isn’t as potent as it was several years ago, the drop in property prices on the Costas has compensated. A buyer in 2009 is actually getting as good a deal than those who bought prior to 2005, because artificial values have been replaced by reality.

Astute property buyers realise that whilst the pound is 15 per-cent weaker against the euro than it was last year, the 30 per-cent drop in asking prices is now equal to a pound set at €1.40 to €1.45.

Speculators, rather than the domestic buyer, also realise that taking out a euro-mortgage, whether they need it or not, will put them at an advantage as the rate continues to improve.

Currency Market updates GBP EUR USD

Currency Market updates GBP EUR USD

Trading for Sterling has seen a mixed bag this week, starting off with gains leading us to the highest levels we have seen this year against a basket of major currencies, heading over the dizzy heights of 1.60 against the Dollar and 1.15 against the Euro.

A year or so ago these sort of levels would have been laughed at but in the current climate people are jumping at the chance to secure them - proof once again just how nasty the currency markets can be.Early morning trading has seen Sterling start to lose ground again following the news of possible job losses within the motor industry due to the ongoing General Motors situation.

Once again I personally believe Sterling as a whole is undervalued it is merely a case of just how long it takes before we start to see a recovery.The past few weeks have seen a minor recovery and possibly the start of the U.K economy starting to turn around but there is still an awful long way to go before confidence is restored and investors put their full trust back into the pound again.

Tommorow sees the release of GDP data for the U.S and will inform us how the economy over there has faired in the past quarter. A common saying on the currency markets is when the U.S sneezes the U.K catches a cold so it may give some indication as to what we can expect in the coming weeks and months.

Feel free to contact me (Daniel Wright) on 0800 328 5884 or email djw@currencies.co.uk should you have any questions, queries or comments regarding this report and I will be more than happy to assist.

90% OF EURO BANKS EXPECT TO INCREASE NON-RESIDENT LENDING IN 09

90% OF EURO BANKS EXPECT TO INCREASE NON-RESIDENT LENDING IN 09

International Private Finance, mortgage, Spain, France, Italy, Portugal

Some 90% of Spanish, French, Italian and Portuguese banks are set to maintain or increase the range and type of non-resident mortgage they provide in 2009, according to a survey from mortgage broker International Private Finance (IPF).

In its International Mortgage Outlook 2009 report, the company interviewed 20 lenders across the respective countries, including: BBVA, Barclays Italy/France, Deutsche Bank, BNP Paribas, GE Moneybank, Banif, Credit Lyonnais and Societe Generale; to find out what this year held for non-resident lending.

The banks said that the most popular product developments, they feel are of interest to international buyers in Spain, Portugal, France and Italy, are higher loan-to-value (LTV) mortgages, an increase in interest-only finance options and more special purpose vehicles (SPVs) for those looking to buy within a company or tax efficient structure.

“As the world’s population becomes increasingly mobile, the need for flexible and efficient ways of financing and owning assets in different geographical locations is becoming more pressing,” said Fiona Watts, managing director of International Private Finance, and author of the report.

Portuguese lenders said that in 2009, the intent to lower the deposit amount required by non-resident investors was the top on their list of priorities, while 100% of French and Italian banks plan to maintain or increase their range of mortgage products available to overseas buyers. Spanish banks, some of the most exposed to the downturn in the real estate sector, said that while some products had been downgraded, 50% expect to maintain current product levels in 2009, while 66% expect demand from international buyers to be maintained, or increase, in 2009.

If you require mortgage assistance or property help contact the Girasol Team on 44 1974 299055 or info@girasolhomes.co.uk

Buy Smart in 2009 - you have the power!

there are still good ways to buy abroad | Primelocation

As if the credit crunch and the impending recession weren't enough, the downside for Brits wanting to buy overseas has been compounded by the plummeting value of the pound.

In just 12 months, sterling's value has slipped from €1.45 to under €1.20 - a fall of almost 20%. Against the dollar, the decline has been even more dramatic. As recently as July you could get $2 for every pound; by late November that had fallen to under $1.50.

Psychologically, it's a serious deterrent for buyers, as it means you could be paying significantly more for the same property than you would have a year ago. What's more, the cost of living in most overseas countries has also gone up accordingly - so that pint of beer, restaurant meal and weekly grocery shop will all be more expensive.

There are a few countries outside the dollar and the euro where the exchange rate pain has not been quite so profound - TURKEY springs to mind - but by and large, overseas homes are less of a bargain than they used to be.

So what can you do about it? One option - if you believe that the pound will make a recovery - is to take out a mortgage in the local currency. Say you want to buy an apartment in France or Spain that costs €200,000, and you take out a Euro-denominated loan for €150,000. Then only the €50,000 deposit will suffer from the conversion at a poor exchange rate, and if sterling recovers in a year's time you could potentially refinance the property at a more attractive conversion rate. This works especially well if you will be earning rental income in the local currency to pay the mortgage interest; but it is a high risk strategy - after all, sterling could decline still further.

Another option is to look in markets where property prices have fallen significantly. Spain is the obvious example; in spite of official figures which purport to show that property prices are still rising, evidence on the ground is that prices have already fallen by around 20% on average, and with many developers on the Costa del Sol or Costa Blanca in financial trouble you could get an even bigger discount, wiping out the effect of sterling's falling value. But don't buy just on the discount - after all, too many properties in Spain were over-priced in the first place.

Ask us how to save money on your new mortgage and buy smart in 2009.

Nigel Salmon - Girasol Homes 44 1974 299055

www.girasolhomes.co.uk * www.girasolhomes.com * www.girasol-bespoke.com

Why sterling might recover - Investors Chronicle

It's easy for an economist to look stupid - he only has to make a forecast. In this spirit, then, here's a prediction - sterling will recover against the euro in the next 12 months.

There are four reasons for this.

First, despite recent lectures on fiscal policy from the Germans, the euro zone economy is in a horrible mess. Latest figures from Germany show that manufacturers' sales fell by 4.2 per cent in November alone, with sales to euro area economies dropping 6.3 per cent to stand 12 per cent below last November's levels. And, in France, industrial production has slumped 7.4 per cent in the last two months alone (that's not annualised, just the raw drop). What has a benefit to the euro zone in the upswing - a larger manufacturing sector more exposed to world trade - has become a curve in the downturn.

Insofar as the pound's weakness reflects a view that the UK economy is the sick man of Europe, it is therefore unjustified.

Secondly, any recovery in global stock markets this year would probably benefit the pound. There's been a close correlation for years (0.45 since January 1991) between annual changes in the €/£ rate and in the All-Share index; when global share prices rise, so does sterling.

So, if investors sense this year that an economic recovery is coming - even if it doesn't actually materialise until 2010 - or if they rediscover their appetite for risk, sterling should rise.

Such a prospect might seem remote now. But remember, 12 months is a long time in financial markets.

It's in this context that the UK's current account deficit matters. When investors are nervous, they traditionally avoid currencies whose countries are running deficits. And when they recover their nerves, such currencies often bounce back. In itself, the UK's deficit is no reason to expect the pound to stay low. After all, we've had it for years, even when sterling was strong.

Thirdly, there's some evidence that the €/£ rate mean reverts. Since January 1990, there's been a significant negative correlation (minus 0.37) between the level of the €/£ rate and subsequent annual changes in it. A strong pound leads to a falling pound, and a weak pound to a rising one.

In other words, foreign exchange markets can be just like stock markets - they over-react, causing prices to rise or fall too much. The very fact that the pound is weak, therefore, might be telling us that it is too weak.

Fourthly, sterling is under-valued. Our chart shows one measure of this, based upon relative productivity in the UK and the euro zone. This measure has some predictive value; in the past, when sterling's been below it, it has risen in the following 12 months. It is now more under-valued than at any time since at least 1990.

We shouldn't make too much of this particular measure. But thinking in vaguer (and, therefore, truer) terms brings us to the same conclusion. It's hard to see a shock to UK inflation, output or productivity in recent months that the euro zone hasn't similarly experienced. So it's hard to see how any measure of sterling's 'fair value' should have collapsed, which, in turn, suggests that the currency is under-valued.

Now of course, exchange rate forecasting is a mug's game, and economists shouldn't set themselves up as futurologists. The message I'd take from this is that it's easy to tell plausible-ish stories about the future. The trouble is, there's an almighty gap between plausible and true.