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Market update on the Pound and the Euro

19
Feb

For UK buyers the strength of the Pound against the Euro has always been an important factor when looking at buying a property in Spain. Casas Manuel are working with the currency specialists HiFX who can offer our clients competitive exchanges rates and help save them money on every overseas transaction they make.

We asked the team at HiFX for their thoughts on the current market situation and here’s their Market Commentary as of 19/02/14.

“Sterling continues its bounce within the 1.20-12250 range with just a short-lived look above the 1.2250 ceiling overnight Sunday on the release of the Right Move House Price data posting a huge 3.3% increase against an expectation of 1%. The pound has since settled towards the middle of the range around the 1.2150 area which is surprising given the disappointing inflation data from the UK yesterday. Expectation was for inflation to remain at 2% (the Bank of England’s Sweet Spot) and the dip to 1.9% will be welcome relief to the MPC as it dampens pressure for an interest rate rise in the medium term, which they appear to want to avoid. This is purely speculative as the Bank of England’s meeting minutes show that the MPC were united in their decision to make no major changes to their forward guidance policy which follows on from Carney’s comments last week that the central bank could still afford to delay raising interest rates as they introduce a range of measures in addition to the unemployment rate to monitor this.

The minutes showed that the MPC feel that Britain’s growth prospects have strengthened while inflation was predicted to be lower due to the strength in Sterling (how insightful!). Last week the Bank of England upgraded its growth forecast for 2014 to show an expansion of 3.4%, which would be the country’s fastest growth since 2007. However, there has been concern from the MPC that Britain’s recovery could slow if sterling continued to strengthen.

UK unemployment rate this morning shows a surprise increase in unemployment levels to 7.2% against an expectation for a flat 7.1%. GBP felt the pressure and had dipped closer to the 1.21 mark against the EUR as a result.

The EUR remains weakened following a low German SEW figure of 55.7 (expected 61.7) showing that economic sentiment in Europe’s powerhouse has declined in the medium term.

Main releases for Europe come later in the week with PMI and consumer confidence on Thursday. UK retail sales will follow on Friday.”

For all your foreign exchange requirement you can contact the HiFX team at their Costa Blanca office via telephone +34 965 978 952 / +34 711 762 922 or by email costablanca@hifx.co.uk

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