Will the Pound Sterling/Euro exchange rate go up or down over the next month?

Question

I have sold a property in Spain and want to transfer the money back at the right time!!

Answer 1

Believe me, it is impossible to know. And I wouldn't trust anybody who said they did.

Answer 2

It has been around this rate for about 2-3 years at least. I would say 1.4 is a fairly stable tourist exchange rate. 1.42 or 1.47 is quite a good rate compared to recent years.

Exchange rate pressure occurs due to the Purchasing Power Parity Path. Effectively, if inflation expectations are higher in the UK than in Euro land then expect the exchange rate to go up. You will get more pounds for the Euro in the future if the UK economy is becoming unstable and the bubble is about to burst.

Other factors which can attract Euros into Sterling are the level of short term interest rates. In other words the Treasury Bills discount rate. Should the Bank of England decide to raise short term interest rates by increasing the discount, the Euro money flow into Sterling should increase and hence the exchange rate should not go bonkers.

There are many other factors which can affect the exchange rate, but I would expect that you will either make money by leaving it in Euros or you will not lose too much. Are there any Euro denominated corporate bonds you could buy which are not junk?

Over the next month I would suspect that there might be a rise in short term interest rates, which may cause the exchange rate to decrease if this was unexpected. I think it might already be factored into the current exchange rate, and so it will probably remain where it is over the next month.

Answer 3

You want the pound to be as weak as possible then, (do you have a figure in mind? currently interbank is 1.47)

I'd suggest hold on for now. Also bear in mind you dont have to convert it all back at once. (move it back to a uk based EURO account and just convert some of it when you feel the time is right)

Consider speaking to a currency specialist about placing a market order that will kick in at a given rate. That way you won't miss the boat! Also they can hold it on deposit for you until it sells earning you some interest.

Answer 4

You best bet is to exchange money now and avoiding too many fees. Of course rates can change, but fx rates are pretty much a random walk. The market is quite efficient and I would not recommend betting on a move in your direction.

Answer 5

It is unpredictable and not set in stone, although because the holiday season has come to an end historically the pound tends to go up....therefore you will get more if you wait a few weeks...at the mo its about 1.42 to the pound

Answer 6

highest chance it will stay the same it hasn't moved much since end of gulf war 2003 after it dropped from 1.6 to 1.4..... go on line and see if there are dealers that will give you a good price. doing nothing is wasting interest on your money Spanish banks suck money out not pay interest

Answer 7

down

Answer 8

Both.