Oct 2014 - Breaking News on Euro to US$ and UK£ Currency Exchange

October, 2014

We have revised our 12 month EUR to USD forecasts substantially lower to 1.10 in 12 months (the lowest forecast amongst 91 contributors in the Bloomberg Composite).

If you are a non Eurozone client (ex. US or UK) buying a property in France, your purchasing power is increasing and your down payment is worth more - either allowing you to decrease your loan to value or increase your overall budget.

WHY?
• We expect the upcoming divergence in euro area and US growth/monetary stances to be unprecedented.
• Euro monetary & fiscal stimuli have proven insufficient to stimulate growth or inflation.
• Tensions with Russia has further affected euro zone activity.
• ECB needs to increase monetary stimulus – include substantial sovereign bond purchases.
• We anticipate tje US Federal Reserve to raise rates in June 2015, with risks tilted towards March. The Fed may even be forced to hike faster than markets are pricing.

Our revised EUR to USD forecasts add upward pressure on all our global USD FX views…

GBP to USD
• We have revised our forecast lower, now 1.5700 in 12 months.
• GBP should trade more in line with positive fundamentals now event risk of Scottish Referendum is out the way.
• Signs that UK expansion was broadening as a result of investment and net exports – the significant deterioration in the euro economic outlook has turned that to a downside risk.
• We expect monetary policy to remain in focus and the prospects for earlier rate rises.
• We believe the first BoE rate hike to be in November – 25bp per quarter in the year following. The market is currently only pricing in 80% chance of a hike at the Feb meeting. As markets adjust to our view we expect GBP to benefit (mostly vs EUR).

GBP to EUR
• GBP should appreciate significantly versus the EUR as the Bank of England moves towards tightening and the UK economy continues to outperform.
• For reasons mentioned above we foresee significant downside in EUR– now looking for GBP to EUR to reach 1.3500 in 6 months.

Revised Forecasts
1 m 3 m 6 m 1 y
GBP USD 1.63 1.61 1.58 1.57
GBP EUR 1.28 1.31 1.35 1.43
EUR USD 1.27 1.22 1.17 1.10

Why is it so useful?

If you are a non Eurozone client (ex. US or UK) buying a property in France, your purchasing power is increasing and your down payment is worth more - either allowing you to decrease your loan to value or increase your overall budget.

Remember that in certain situations, a mortgage can be a useful to hedge against currency exchange and allow you to choose the moment to convert currencies.

Contact us Today Save Money on Currency Exchange

France Home Finance will ensure you receive expert advice on rate and timing and most importantly save you money on the margin charged on your transfer. We are almost always able to beat what your bank will charge you!

Posted October 24, 2014