Trad­ing floor man­ager at Cur­ren­cies Di­rect, high­lights the fi­nan­cial trends for this month

Phil McHugh,

Living France - - LES PRATIQUES -

The heady lev­els of GBP/EUR over 1.40 seen in late 2015 now seem like a dis­tant mem­ory. The pound has also tum­bled against a bas­ket of other cur­ren­cies demon­strat­ing an over­all weak trend. So what is be­hind such a sharp move lower given we now see GBP/EUR in the mid 1.20s?

As is nor­mally the case with the cur­rency mar­kets, there are a few in­de­pen­dent driv­ers that have to­gether cre­ated a per­fect storm for the pound. Firstly, the sig­nif­i­cant fall­out in the global econ­omy, par­tic­u­larly from China and fall­ing oil prices has cre­ated a rip­ple of fear that has per­me­ated the mar­kets. In an en­vi­ron­ment of fear the pound tends to get sold and we have seen this sell­ing pres­sure al­most con­stantly in 2016 due to volatile and neg­a­tive global con­di­tions. To add to this, we have also had clar­i­fi­ca­tion on the EU ref­er­en­dum vote which is set for 23 June. The un­cer­tainty be­hind this vote has al­ready started to un­der­mine ap­petite for the pound. A po­ten­tial Brexit may or may not be a good thing for the UK econ­omy and this un­cer­tainty is drain­ing value from the pound.

The pound dropped sharply fol­low­ing the news that Lon­don mayor Boris John­son is back­ing the call for a Brexit. The fi­nal rea­son for a lower pound is down to sen­ti­ment from the Bank of Eng­land, which has ham­mered home the point that in­ter­est rates are not set to move higher any time soon. It could be ar­gued that the pound was over­val­ued in late 2015 any­way and this move lower is a wel­come cor­rec­tion which will sup­port ex­ports and help drive the UK econ­omy, and re­duce the deficit.

Look­ing ahead we are set for a very in­ter­est­ing few months. We have the run-up to the ref­er­en­dum and the mar­kets will look to get an idea of how polling is lean­ing. We also have the prospect of fur­ther eas­ing by the Euro­pean Cen­tral Bank (ECB) to curb fall­ing in­fla­tion. Throw the ac­tiv­ity of the US Fed­eral Re­serve and on­go­ing mar­ket volatil­ity into the mix and it is set to be a bumpy ride ahead! cur­ren­cies­di­

On page 27 of the March is­sue, we stated that the prop­erty in Céret priced at €249,950 could be con­verted into two apart­ments with sep­a­rate en­trances. The prop­erty can al­ready be used as two apart­ments and al­ready has sep­a­rate en­trances. We apol­o­gise for the er­ror.

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