Of FC Ex­change, says that de­spite a shaky start to the year, there’s rea­son to be con­fi­dent

Charles Mur­ray,

Living France - - Les Pratiques -

Risk has been the key word in 2016, and height­ened mar­ket risk has brought un­cer­tainty not only for the GBP/EUR rate but for the world mar­ket as a whole. The GBP/EUR rate has fallen close to 6% since the start of the year, the euro be­ing the main driver of this move­ment. With world mar­kets be­gin­ning to grow ner­vous over the ten­sions in the Middle East, plus the de­cel­er­a­tion of eco­nomic growth in China and fall­ing com­mod­ity prices, it was the sin­gle cur­rency that was able to ben­e­fit. The euro’s ap­par­ent safe haven ap­peal in a world full of trep­i­da­tion has al­lowed it to re­claim a large pro­por­tion of the ground given away to the pound in 2015, breach­ing the 1.30 in­ter­bank rate (IB) for the first time in a year.

The pound’s run of good form has also come to an end for the time be­ing, with the Bank of Eng­land, once again, con­firm­ing that in­fla­tion in the UK is likely to re­main low for the fore­see­able fu­ture, with in­ter­est rates un­likely to go up in 2016. The UK’s chan­cel­lor Ge­orge Os­borne gave a harsh warn­ing early in Jan­uary that “a dan­ger­ous cock­tail of eco­nomic risks” could se­ri­ously dam­age the UK econ­omy in 2016.

The Euro­pean Cen­tral Bank (ECB) has also played a big part in the rise of the sin­gle cur­rency this year. The com­ments com­ing from the cen­tral bank re­gard­ing its ex­ten­sive quan­ti­ta­tive eas­ing pro­gramme and its neg­a­tive de­posit rates have all been up­beat, with the Bank of France’s gov­er­nor and ECB mem­ber, François Villeroy, stat­ing that the “eu­ro­zone econ­omy is pick­ing up”.

How­ever, com­ments from the ECB pres­i­dent, Mario Draghi, on 21 Jan­uary did con­tra­dict this view some­what, as he men­tioned “down­side risk has in­creased” and that they are pre­pared to act when nec­es­sary. The fact the ECB is ready and pre­pared to act if mar­ket con­di­tions change dras­ti­cally has al­lowed some of the neg­a­tive news with re­gards to the euro to be muted, as in­vestor con­fi­dence in the re­gion be­gins to grow.

If we can see a con­sid­er­able up­turn in the UK’s data in the com­ing months, then per­haps the GBP/EUR rate can push back up to the mid-1.35 IB lev­els. In­fla­tion and man­u­fac­tur­ing have both showed signs of a marginal re­cov­ery, which is a promis­ing de­vel­op­ment this year.

All in all, 2016 has started in a tem­pes­tu­ous fash­ion, but de­spite this, the prop­erty mar­ket in France re­mains buoy­ant. With this in mind, we an­tic­i­pate that many prop­erty buy­ers will be fo­cus­ing on for­ward con­tracts. fcex­change.co.uk

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.