The pound has been bouncing up and down in early trading this week as the aftershocks of the General Election continue to be felt through the currency markets. Last Thursday we hit a three-year high against the euro within 5 minutes of the exit poll showing a decisive Conservative victory, and we continue to see volatility in the market.
Overall though, maybe you’re disappointed that the pound didn’t stay higher for longer? After its exit-poll bounce, the pound dropped back a cent or so very quickly. This was because a Johnson victory had been effectively priced into the pound before Thursday.
It has continued downwards since, as the reality of the project facing the Government dawns. This week the Prime Minister moved to make it a legal requirement that the transition period ends at the end of 2020, which sent the pound even further south.
Nevertheless, today’s rate is in the upper range of the major banks’ projections, as highlighted in our most recent currency forecasts, still free to download.
For anyone planning on buying a property in Europe, the next year will be crucial in two ways. Firstly, the transition period – scheduled to end on 31 December 2020 – offers the chance to become resident in the EU and retain all your current EU rights to health, pensions and residency.
Secondly, you can lock in your exchange rate for the next year with a forward contract, on payment of a small deposit. If, over the next year of intense EU negotiations, including a potential no-deal, the pound should slip, you will be guaranteed today’s exceptionally good rate.