The pound managed to retain its position very close to a 23-month high against the euro and two-month high against the US dollar. Indeed it is only a fraction off its best rate for over five years.
Those of us who watch the data releases closely can enjoy trying to work out what the very mixed signals mean for the global economy as it starts to come out of the pandemic. US inflation will certainly be a key one, later today, currently at its highest rate since 1982.
We are not the only ones examining the entrails of the global economy for clues, and as our new Quarterly Forecasts, out early next week, will show, the governors of central banks around the world have some interesting decisions to make.
Looking at rather more exciting matters, Smart are sponsoring and taking part in new webinars for Your Overseas Home starting next week. In less than one hour you’ll discover what you need to know if buying a property abroad – or retiring abroad – in 2022. You’ll have the chance to ask your own questions too. Sign up for them here.
The big risk, when the pound is so strong, is to give way to ‘irrational exuberance’, as a former head of the US Federal Reserve put it, and believe that the pound will stay at that level, or rise further, when we have no fundamental reason why that should be.
In practical terms that means assuming that if you make an offer on a property abroad, that the pound will still be at this level – a good 6% above the five-year average – when you come to complete. The reality is that there is every possibility that sterling will have retreated to its average and, on a €200,000 property, you’ll need to find £10,000 more.
To avoid that risk, talk to your trader today about locking in today’s rate for the year ahead. You can do that on 020 8003 4915.
