Sterling has battled its way back up from last week’s falls against the euro and now stands not far from the 10-month high it reached in June.
It’s a similar story against the US dollar, where yesterday GBP/USD was nearly 5% stronger than on the last 4th of July. That makes a $250,000 property in Florida around £13,000 cheaper than the last Independence Day.
Of course, property buyers in the US or the eurozone, might be tempted to hold out for something better. After all, if sterling strengthened yesterday, why wouldn’t it tomorrow?
That would be a classic case of ‘optimism bias’. It’s one of those cognitive biases, and this one is prevalent in 80% of the population, especially those of a more sunny disposition. At a deep psychological level most of us believe that, given two equally likely outcomes, the better one will prove to be true. In government it’s a serious problem, known as the ‘planning fallacy’ and the reason why HS2 will cost billions more than budgeted and the Elizabeth Line took years too long to complete.
For anyone committed to a major purchase abroad, there is absolutely nothing in recent rises in sterling to suggest that it will continue to strengthen. That is why we always advocate hedging your bets with a forward contract as soon as you are committed to a major transaction abroad. You can do that with a call to your trader on 020 7898 0541.
One can still be optimistic. Buying a property abroad, or retiring to a new country, is a wonderful risk and one that we applaud. But there’s no need to put your money at risk too.
