Political turmoil leaves pound floundering

What does the summer hold for the pound? With British politics and Brexit negotiations as torrid as the weather, it’s anybody’s guess. (So don’t leave it to guesswork!)

Two weeks of Wimbledon and not a drop of rain? Although the Meteorological Office might not know exactly when the heat wave and drought will end, parents do. It will end on the first day of the school holidays. So get your brolly ready for Monday.

Judging by the last two years, holidaymakers may feel they know better than financial analysts when the pound is about to collapse too. It will be as soon as they change their holiday cash. Last year the pound weakened from €1.14 the week before schools broke up to €1.10 the week after.

Many airport bureau de change were giving less than one euro per pound as millions of stressed holidays makers, who hadn’t prepared, queued up to change their money. It was the same in 2016 too, falling from €1.20 in July to €1.15 by the second week of August.

Could the same happen this summer? Yes. Indeed had Theresa May not won the two Brexit votes on Tuesday and Wednesday this week in the House of Commons it may well have done already. Conservative Party whips were warning potential rebels that the government would fall if the vote went against the Prime Minister, while the latest opinion polls put Labour four or five points ahead in the country.

At Smart Currency Exchange we have the tools that can help you manage currency risk

Political instability tends to weaken a currency, as does economic uncertainty. And whichever party you support, a general election and potential “no deal” scenario from Brexit would certainly be unstable and uncertain.

A fall in the pound would have been irritating enough for those just changing some holiday spending money. For property buyers, perhaps rushing to get into Europe before Brexit, it could have blown a huge hole in their budget.

So how can you protect yourself, and your property purchase abroad, especially if you’re buying a holiday home this summer? Fortunately, at Smart Currency Exchange we have the tools that can help you manage currency risk. Many overseas property buyers opt for a Forward Contract. This sets today’s exchange rate, on payment of a 10% deposit, for up to a year. You can then wait for the property buying process to continue, safe in the knowledge that Brexit or any other uncertainty won’t drive up the cost.

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