The government has lost its majority, the bill against no-deal is making its way through Parliament and Boris Johnson is set on finding a way to hold a general election. No-one can predict what’s coming up, but whatever happens will likely significantly impact the pound. So what’s going on and how can you stop your money losing value?
What’s happened so far?
Parliament resumed last week for a short session – Boris Johnson had already announced his intention to prorogue (or, officially, for the Queen to prorogue) Parliament until 14th October October. Officially, the reason is to be able to set out new legislation in the Queen’s Speech, but a legal challenge is currently running in the Supreme Court, after Scotland’s Court of Session ruled that the suspension was ‘unlawful’ and done with the intention of the ‘improper purpose of stymieing Parliament’.
Johnson has said that the government will explore its options in regards to the Brexit bill, with the subtext that no-deal should still be kept as an option. Whether this is possible or not remains to be seen. However, mixed messages are still coming from the EU – France has said that it would veto a further extension, while Angela Merkel said on Wednesday that there is ‘every chance’ of a last-minute deal. Much of the EU member states’ objections to an extension have come from concerns that nothing has actually changed since the last extension, but a new draft document has stated that one could happen for a valid reason that could include ‘to avoid a no-deal exit’). So could an extension be forthcoming? It’s impossible to say, but both possibilities are clearly very much on the table.
Is an election coming?
Boris Johnson tried calling for an election at the beginning of last week, but it was rejected as Labour MPs were whipped to abstain. Jeremy Corbyn has said that he will not support an election until no-deal is blocked. The government will tried again this week with a further motion on Monday, which was also defeated. That said, it’s widely accepted that there will be an election at some point.
How have the markets reacted?
We saw a dip at the start of last week, as the government lost its majority, and then the pound was back up against the euro on mid-week on hopes of ruling out no-deal. However, due to the simply unpredictable nature of politics – no-one knew Dr Lee, for example was going to cross the floor – means that no-one can tell you with certainty where the pound will go. Worries over the eurozone economy, conversely, have helped to strengthen the pound today.
The risk to overseas property buyers, then, is that your budget could suddenly be worth an awful lot less in euros. However, this risk is easy to control – and there’s no reason to have to put your plans on hold because of what’s going on in Westminster.
How can you protect your budget?
The most important thing is to have certainty – to know exactly how much your money will get you in euros.
For most people, this means using a forward contract, as the majority of our clients in our recent survey were intending to do. A forward contract simply locks in today’s exchange rate, unchanging, for up to twelve months, and for no extra fees. That way, if the pound suddenly drops in the next few days, just as you’re about to offer on a house or make a key transfer, you know that your budget won’t change.
As one customer, Ginny Waterworth, recently told us in a 5-star review on Trustpilot, ‘Excellent service from Jack Wiggs at Smart Currency who helped us with the purchase of our property in Lanzarote. Very good advice on fixing the exchange rate early to avoid the inevitable fluctuations in GB pounds to Euro during ‘Brexit’ and Boris’s election to leader of the Conservatives.’
A forward contract is easy to set up – simply call your Personal Trader on 020 7898 0541 or, if you haven’t yet, open an account with us to get started.