Fixed a bad £ to Euro rate

Good Morning from the UK

We know very little about currency markets etc so we need a bit of advice - we are purchasing a property in Spain and during the mayhem that followed the Brexit vote here in the UK the pound lost quite of value against the Euro

We finally ( having to wait for the funds ) managed to secure a fwd contract with a reputable currency exchange firm, but we lost quite a bit money due to the fall in the £, but at least we have Euro s waiting for the trf to Spain early in the new year.

I wondered if it is likely that the Euro will fall due to the outcome of the Italian and Austrian referendums and elections i.e I could buy £’s and hope the Euro depreciates against the £ then buy Euro s again ? … I suppose it’s a bit like asking “How long is a piece of string” and in truth it’s a decision only for us to take.

I really do not expect a Yes / No answer and clearly this is advice only, but we are down quite a bit - had Brexit not happened we would have been fine as we had previously calculated and then secured what we needed - but now we the UK & the EU are in really turbulent times.

Any good HONEST advice ( which could actually mean stay put and don’t risk it ) from experienced contributors would be most welcome.

Thanks

Danny

No ones knows the future direction of any currency pair, if they say this then you can discount their advice in a heart beat. From a trading point of view, which is what all the people on this forum aspire to do correctly, we don’t need to be right all the time either - it’s simply a game of probabilities. The long term result of many individual ‘trades’ will determine our true success.

For you though, you are talking of a single transaction against a critical asset [a property]. At best I would avoid any financial advice from such FX traders (novice or expert - of which you will never know anyway, with the majority not being the latter)

I would have thought that your currency broker who exchanged the GBP for EUR would have locked in an exchange rate regardless of future fluctuations, by hedging. You have said that this was a bad rate, but surely this rate was good enough for you to purchase your property (or you would have not accepted it).

If I was you, I would sit back and take the ride - whatever the exchange rate will be it will be. Should you start hedging to speculate an improved more favorable rate then the downside risk could be far more than the potential benefit.

Hi Jezzode

To be fair to my Currency Broker I made the decision to tie up the rates one was at 1.1375 and the other was 1.0701 fwd ( tied to 2 separate amounts ) which and you are correct secured the purchase just about, but our original calculation when we went into this as the pound against the Euro was much stronger left us a bit more to sort out things that needed fixing with the property.

By the time the £’s arrived in our account the exchange £ to Euro’s went down quite a bit - I have never done any kind of trading before but what I quickly realised was that my bank offered me a very poor exchange so I calculated our budget based on what an external exchange house offered - its been a very steep learning curve.

I have looked at a Stop Loss order and also a Limit Order - but I am now beginning to think that I should as you suggest sit with what I have as the consequences ( for us if it goes wrong ) could be very bad - I noticed that Austria have decided to stay with the original election result and I would imagine the markets have factored in a Renzi defeat in Italy - the currency markets seem to react to what ever any senior politician who has some influence says rather than economic results … its a very strange place to be at present.

Thanks so much for your post its been extremely helpful - the property is much more important than trying to claw back what we originality counted on - so I may have to sit back and be thankful that we at least can go ahead with this and enjoy it when it comes.

Best wishes

Maybe - but it’s (always) “more complicated than that”, isn’t it - in this case perhaps partly because a Renzi defeat isn’t guaranteed to produce his resignation anyway?

Anyone here who offers an answer to what you really want to know is only going to be guessing, anyway.

I know very little about fundamentals, but my own guess is that the Euro’s more likely to decline in value than to appreciate, against other currenceis, in both the short and medium terms, for the reasons you mentioned among others; I can’t “recommend” my own opinions on this subject, though. It [I]might[/I] be just as wise to assume I’m totally wrong.

Good luck - especially with your new property!

Thank you for your contribution lexys

I now realise that my subject title should have been something like " I secured an exchange rate in panic mode " :slight_smile:

Out of all of this I am really missing the bigger picture in that we can actually afford the property - we obviously can not fix things as quickly as we wanted to, but at least we can go ahead with the purchase early next year.

The experts posting predictions when the pound was at 1.070 started speculating that the pound/euro would reach parity - well you can imagine my shock, not being well versed in currency fluctuations I decided to fix what I had and put our minds to rest

As with Brexit and claims that the UK Economy would tank within weeks and that an immediate emergency budget would be required well that showed me that so called experts do not really know as much as they let on

Thanks for you good wishes

The “emergency budget” threat, I strongly suspect, was part of a last-minute “remainers’ panic” as they increasingly realised they [I]could[/I] actually lose.

About the exchange-rate, I think you’re right to take mostly the long-term view of the whole project. It’s property, after all: you have to take a long-term view with property (unless you’re a developer, or something, I suppose). I have “been there; done that”, a couple of years ago: I bought a little flat in Marbella old town as a long-term investment, and got it for a good price but at a “second-best” exchange-rate. In the long run, it doesn’t matter. :slight_smile:

Not a developer just want to enjoy some warm summers close to home instead of us travelling to Barbados every year … 100% agree with everything else you wrote :slight_smile:

I bought mine partly for similar reasons: Marbella was somewhere I actually wanted to visit quite often (partly for all the bridge/backgammon tournaments there) and I liked the long-term investment potential, but then my circumstances changed and I haven’t actually been able to get back there at all, since then (have been very lucky renting it out, though, so far).

Barbados doesn’t sound like too much of an imposition, though, I have to say!

Barbados is and will always remain for us the most beautiful place to have a holiday, its completely different to Europe but I for one got tired of the 8.5 hour flight plus the time zone difference.

Our purchase ( and I just noticed I mentioned Spain in error in fact I was talking about Spain to a friend while sending the first post ) we have actually purchased in the South of France the region is not too far from the Italian and Swiss border.

We also have Nice and Cannes not to far away from us, so all in all we have a closer location with almost guaranteed long summers + a shorter travelling time and we are within the same time zone.

It was just to appealing to turn down an opportunity to have our first Holiday home abroad.

Hi Danny,

Everyone has opinions and they make their decisions based on those.

To reduce risk some guys exchange currency at specific levels in stages, those moving GBP to EUR will wait on pre determined number and then exchange a pre determined percentage.

For example an exchange of buying 200k Euro could be done in 4 increments.

The next level being waited on could well be 85.00

Many ex-pats in Spain use these guys for Eur/Gbp, at least their on line calculator will give you something to compare.

Edit: I see you meant La Belle France, same applies.

Btw, right up to date, in about 2 hours the Italian referendum will set the tone for the weeks ahead, opinion polls are suggesting a ‘no’ vote, if correct then good chance some Euro selling.

If a ‘yes’ then a completely different picture, let’s see.

Good morning Peterma (07.30am here )

It’s a strange old time … how can any credible institution let alone any government steer a course through this ? it must be like treading through quicksand and then finding treacle waiting for you !!!

I will keep a keen eye on what is going on as a window might open - I will talk to my Trader when he gets into work today … even though Renzi has indicated that he will resign later on this afternoon, it has to be accepted by the President ( a technical point I know but never the less it’s not done yet )

I am going to be ultra cautious as I have said here when I first posted and after a few exchanges we are not going to take risks - let’s see how the next 48 - 72 hours shape up, but my inclination is that we are going to stay put …