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Alpine property becomes more affordable, as pound climbs versus euro

Posted on Wednesday 30th April 2014 by Guest Blogger- Peter Lavelle

Great news for you if you plan to buy an Alpine property! Sterling has recently jumped to 1.2258 versus the euro, its highest in 14 months, or since January last year. To put this into context for you, the pound was as low as 1.1379 in March 2013. Hence, it's now up by almost 9 cents!

How much cheaper is Alpine property as a result of the stronger pound?

If you'd transferred £500,000 to the Eurozone to buy an Alpine property last March, when the pound was at its weakest, you'd have got €568,950. By contrast, were you to do it now, you'd receive €612,900. That's a rise of +€43,950 in the last 14 months, which clearly makes Alpine property more affordable today!

Why has the pound risen against the euro?

Sterling has climbed, because the UK economy is back on its feet. For instance, the Bank of England thinks the UK will grow +3.1% in 2014, the fastest of any major country. Meanwhile, the euro has weakened, as the Eurozone faces the risk of deflation, and Japanese-style economic stagnation.

What's the best way for me to transfer my money abroad?

If you'd like to take advantage of the strong pound, but don't yet want to transfer your money abroad, you can use what's called a forward contract. This allows you to lock in the exchange rate at its existing point, yet transfer your money at any time you like in the next two years. So you're guaranteed a good exchange rate.

Will the pound continue to climb against the euro?

If the pound is to climb further, the UK economy will have to continue outperforming like it's been doing. For instance, were unemployment to drop precipitously, or the Bank of England to announce a sharp hike in interest rates this would almost certainly mean the pound will fly even higher.

About the author

Peter Lavelle is a currency broker at foreign exchange specialist Pure FX.

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