Sterling Steady as Brits Buy Property Abroad

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Sterling remains steady due to investor confidence and a drop in the US dollar. According to the Financial Times, “Befuddled sterling shows markets aren’t all-knowing.” This offers a further boost to those who seek to make international transfers to buy their dream home abroad.

According to the FT, “It is tough, if not impossible, to find a single fund manager who genuinely believes a no-deal Brexit will happen, which is why it is not being built into the pound’s exchange rate already. ‘No one in the financial world thinks “no deal” is a remote possibility,’ as one hedge fund manager put it. Such confidence has encouraged sellers to reel in their bets and helped the pound to become one of the best-performing currencies in the world against the dollar so far this year.” The optimism by investors who believe in a soft Brexit outcome has been priced in the pound, as it is to everyone’s benefit that a benign result occurs.

The possibility of a no-deal Brexit has, at least temporarily, been put on hold by a group of MPs. With a cross-party group of MPs led by Labour’s Yvette Cooper and Conservative Sir Oliver Letwin passing an emergency bill seeking an extension to article 50 and avoiding a no-deal Brexit, the political landscape is looking slightly more stable. The pound’s stability then is partly the result of investors trusting the British government to deliver the best possible Brexit.

Investor positivity should not be overestimated

Optimists who believe that Brexit can only end up well, have been warned by many analysts and economists who are urging extreme caution, as the pound can at any moment decline rapidly, due to a changing political situation. For example, UBS Wealth Management has warned: “At these levels, the currency is still pricing in a benign outcome. A hard Brexit could easily see sterling lose another 10 percent.”

At the same time, there is a possibility for the pound to go up if there is a last-minute Brexit deal, as no one can confidently make any predictions. This is why professional market forecasters are currently clueless as to what might happen.

If you are considering buying property abroad, taking the necessary measures to protect your funds, especially when sending large sums of money abroad is a way to avoid any damaging effects of the pound’s sharp drop. As the FT article explains, “Some of the stability in the sterling-dollar exchange rate, however, is a mirage. Yes, the pound was stoic when parliament’s Speaker sought to rule out a repeat vote for MPs on the prime minister’s favored Brexit deal. Sterling was steadfast when Theresa May on Wednesday insisted on sticking with her preferred course. But a look at short-term moves in other leading currencies suggests that the pound has been supported by weakness in the dollar.”

So, as the Federal Reserve avoided raising interest rates, this has affected the dollar, which dropped against the euro and other peers. But a lower dollar does not mean a steadier pound. According to the FT, “Be under no illusion, though: that support would almost certainly prove insufficient if politicians were to disappoint investors still hoping for an outbreak of common sense.”

So, when you are planning to transfer your funds to buy a home, protecting your hard-earned money from rate volatility and being able to access favorable exchange rates can be done through a foreign exchange expert. A specialist can help you get your bank beating international money transfers, quickly and securely, so you can enjoy your place in the sun