The pound will rally as soon as there is progress with the Brexit trade talks. It might remain under pressure for the next few months, but as the Brexit trade talks progress and a deal is reached by October, then Sterling will likely begin to rise and get back on track towards a more sustained recovery. At the current moment, increased worries regarding a no trade deal will continue to put pressure on Sterling.

"Sterling has been somewhat caught in the middle between an appreciating Euro and a depreciating Dollar. As attention moves from the EU Recovery Fund possibly toward the ongoing Brexit talks we see potential for Sterling to rally on positive sentiment around those discussions. We continue to expect progress in these talks to open the door for an agreement likely in autumn. We also expect the UK economy to continue to catch-up with the rest of Europe," said Gaétan Peroux, Strategist at UBS.

For the time being, the impasse around the Brexit trade talks is not helping to support the pound, especially as the euro is growing stronger.

Brexit trade talks

With the trade walks remaining at a standstill, as both sides have agreed that significant disagreements remain, the market will remain cautious of the pound. The EU’s chief Brexit negotiator, Michel Barnier said: "By its current refusal to commit to the condition of open and fair competition, and to a balanced agreement on fisheries, the UK makes a trade agreement at this point unlikely.” However, both sides feel that they are coming closer to a deal in September or October, the latest. Therefore, market uncertainty will keep Sterling muted until the autumn.

Optimism for a Brexit deal

Charles Grant, the director of the Centre for European Reform, wrote in The Guardian, that he is optimistic about both sides reaching a deal. He said: “Failure is certainly possible. But a deal this year is more likely, for several reasons. First, there has been more progress than one might suppose from the public comments of Barnier and David Frost, the UK negotiator. The EU has hinted at a softer line on fisheries and state aid, and agreed that an arbitration mechanism rather than the European court of justice should adjudicate on disputes.” Things are also more positive in regards to the UK’s position as it has become more flexible, agreeing in staying in the European convention of human rights and to the EU’s demand for an “overarching structure encompassing various EU-UK deals, as opposed to a series of disconnected agreements (which the EU has with Switzerland and strongly dislikes).”

Grant argued that there is still time for both sides to resolve their differences, as the real deadline for a deal is mid-October. Additionally, the coronavirus pandemic has changed the political landscape and the possibility of a deal. It has increased concerns regarding the PM’s competence, and if 2020 ends with no deal, this will immediately reflect negatively on the government, especially with the ensuing chaos regarding the traffic of goods across borders. For Grant, this is important, and it might push Boris Johnson to show more flexibility.

Another reason that a trade deal needs to happen, and it is possible, is paradoxically a political one, rather than a financial or practical one, and that is to stop support for the SNP in next May’s Scottish elections. A no deal Brexit will increase calls for Scottish independence and will make Johnson’s job of having to block another call for an independence referendum, more difficult. In terms of Ireland, a no deal Brexit will create more issues with goods travelling from the UK to Northern Ireland as tariffs would need to be paid.

More importantly, a no deal Brexit will be devastating financially, and business leaders expect the government to be able to secure a deal by October. The PM has to deal with the competition as Labour’s Keir Starmer is a stronger figure than Jeremy Corbyn, more pragmatic and sympathetic to businesses. Johnson’s government would need to remain united around Brexit and strive for a deal as it will be economically and politically disastrous if a hard Brexit happens. For Grant, the biggest impact of no deal would be political: “An acrimonious end to the transition would hit economic confidence and make it very hard for the UK and the EU to build close cooperation on trade or security for years to come.”

While political and economic conditions remain unstable and the pound will be under pressure, Grant’s commentary offers an erudite addition to the ongoing discussion on Brexit and its economic implications. Indeed, his political intervention coincides with financial strategists and market experts’ point that a Brexit deal is necessary for things to get back on track. Only then, will the pound achieve a sustained recovery.

Transferring funds abroad? If you are buying a home overseas or want to transfer funds to family and friends living abroad, get in touch with our friendly  Universal Partners FX team. UPFX’s dedicated foreign exchange specialists can help you access the most competitive exchange rates and make your currency transfers stress-free.

The British Pound has remained under pressure on Friday, especially after Thursday’s losses due to disappointing news that the Brexit negotiations have hit an impasse. Today’s (24/07/2020) better than expected retail sales did not help push the pound higher against its major rivals.

Brexit and Covid-19

Despite positive macroeconomic data, the coronavirus pandemic and concerns about the state of the Brexit trade negotiations have weighed on the pound. As the Guardian reported, on Friday morning the release of “the retail figures are doing little to support UK stocks with the FTSE 100 down 1.36% and the more domestically focused FTSE 350 down 0.6%.”

Positive Retail Sales’ Numbers

The easing of lockdown in mid-June helped UK retail sales beat forecasts in June. The Office for National Statistics has reported a 13.9% month-on-month rise in UK retail sales last month, marking an 8% uptick. Even for former Bank of England policymaker Andrew Sentence, the figures highlighted that the UK was on its recovery since the Covid-19 outbreak. The retail sales’ increase was the result of consumers spending for DIY and home improvement products due to the lockdown, with shops selling hardware, furniture and appliances doing particularly well, and reaching near-pre-lockdown sale levels.

With the easing of lockdown measures, consumers preferred real physical shops rather than online shopping, as the ONS noted that the proportion of online sales retreated from its record peak in May. Online spending, however, remained at 31.8%, higher than February’s 20%. UK total retail sales are now just 0.6% lower than February before the lockdown.

ONS deputy national statistician Jonathan Athow said:

“Retail continued to recover from the sharp falls seen in April, with overall sales now almost back to pre-pandemic levels. But there are some dramatic differences in sales across the retail industry. Food sales continue above their pre-pandemic levels due to the closure of cafes, restaurants and pubs. Online sales have risen to record levels, and now count for £3 in every £10 spent. On the other hand, clothing sales remain depressed and across the high street sales in non-food stores are down by around one-third on pre-pandemic levels. The latest three months as a whole still saw the weakest quarterly growth on record.”

With the exclusion of fuel sales, due to the lockdown and limited travelling, the level of sales was 2.4% higher than in February. According to figures, Britain’s economy shrank by more than a quarter in March and April and recovered slightly in May.

Is the UK economy recovering?

Former Bank of England policymaker Andrew Sentence said that the figures highlighted the UK was on its recovery since the Covid-19 outbreak. The Bank of England’s chief economist, Andy Haldane, has also pointed to a V-shaped recovery with the economy growing by around 1% a week, something that many of his colleagues have questioned. The British Retail Consortium said that spending among large high-street chains was 3.4% higher this June than last year.

As investors await the release of more figures to confirm expectations of a sustained economic recovery, the pound will remain under stress with Brexit as well as the growing number of deaths from Covid-19. If you are buying a home overseas or want to transfer funds to family and friends living abroad, get in touch with our friendly  Universal Partners FX team. UPFX’s dedicated foreign exchange specialists can help you access the most competitive exchange rates and make your currency transfers stress-free.

The British Pound pushed higher after investor sentiment improved due to the positive news that a deal between EU leaders have been reached. The euro also rose higher. The deal includes €1.8tn in spending, with a €750bn rescue fund to deal with the coronavirus pandemic. €390bn out of the €750bn will be made in grants.

Brexit trade negotiations a key driver for the pound

However, Sterling continues to remain under pressure as Brexit developments can thwart sentiment, while any updates from the Bank of England in relation to negative interest rates can also create further concerns.

Brexit negotiations will take place from Tuesday to Thursday and will cover such issues as trade in goods, fisheries, energy, transport and participation in certain EU programmes. The round will end with a plenary session on Thursday. The Brexit chief negotiator Michel Barnier will hold a press conference and investors will be watching to see any signs of progress regarding the latest round of EU-UK trade negotiations which will significantly boost Sterling.

Brexit trade deal and Tory rebellion

Boris Johnson faces a rebellion from Tories who want to pass an amendment to the Trade Bill that will allow the House of Commons and House of Lords to vote for a trade deal agreed between the UK and any other country.

After Brexit, the UK will need to renegotiate trade deals, something that has been celebrated by Brexiteers and criticised by Remainers. For many, such trade deals with countries like the US will sacrifice certain standards that were followed while the UK was under European legislation. After leaving the European Union at the end of this year, Britain will need to be extremely cautious when striking new deals that will be beneficial to its people rather than meeting the demands of political agendas. The government’s reluctance to allow its lawmakers and the people’s representatives to have a say in the negotiations, goes against its own promise of taking back control from Europe and giving it back to the UK people. Additionally, it denies any scrutiny and seeks to pass deals without a dialogue, enforcing laws that could have repercussions on the social and political lives of its citizens for years to come.

Post-Brexit trade talks on a standstill

EU officers have complained that trade talks have been “going round in circles”, and Downing Street said that “significant differences remain on a number of important issues.” This is what is also expected to be reiterated on Thursday when Barnier appears at the press conference, as both sides are anticipating a stalemate.

Another round of talks will begin the week of August 17, but Germany said that it won’t begin to focus on the negotiations until September.

Boris Johnson does not want talks to “drag on into the autumn”, but he will need to make some concessions to see any movement forward. “We’re waiting for the UK to move,” an EU official has said according to the Financial Times. Johnson has talked of trading with the EU like Australia, but he would need to secure a trade deal that will eventually confirm his competency as a Prime Minister and avoid a disorderly Brexit that could lead to calls for Scottish Independence.

If you are a business sending large amounts of funds abroad and are worried about currency volatility, please get in touch with Universal Partners FX. UPFX’s dedicated foreign exchange specialists can help you access the most competitive exchange rates and make your currency transfers stress-free.

With more businesses opening slowly due to the coronavirus pandemic and the impending Brexit transition period ending on 31 December, an increasing number of Brits are looking to buy property in France. Many Brits want to secure a French property before Brexit, while others have chosen France for their holiday home, as they can drive there by car or reach it by ferry.

In The Connexion, an estate agent highlighted the rising demand for French homes by Brits, saying that “the phones have not stopped ringing’” as Britons are interested in buying a home in France before the end of the Brexit transition period.

Staycations

In an article in The Times, interest in staycations has now become the norm, especially after Covid-19 where travellers avoid airports. But, the meaning of a staycation need not be limited to spending vacations on British soil. Brits remain interested in buying a home abroad, but they are now choosing locations that they can reach by car. Director of French estate agency Leggett Immobilier, Joanna Leggett, notes that “We have seen a 42% rise since this time last year in enquiries from the British for properties that they can drive to.” “If you can get in your car, go through the Channel Tunnel and be in your house without having to see anyone except passport control, that’s actually a really good option for people now,” she said.

Brexit and buying a house in France

The number of British people moving to EU countries has remarkably grown since the 2016 Brexit referendum. With the UK expected to leave the single market after January 1, 2021, and any British arrival to France after that date to be regarded as outside the European Union, many Brits have begun looking for their holiday homes in France. This has helped increase property sales and may also result in France overtaking Spain as the number 1 destination for Brits moving abroad.

As Joanna Leggett said, this has had a positive effect on the property market: "Our sales to Brits at the beginning of the year were up 38% [year-on-year] until March, 85% of them were for main homes.  Our website hits are up 87% for the English-language version of our site and enquiries on properties are going completely mad.  We have so many Brits with reserved bookings coming from July, we expect the next three months to be our busiest ever." She also remarked: “I think the mad panic does seem to be that the British want to get here and they want to find their property and to be in it to qualify for the residency that we get at the moment.” She added that the period between July and September will be the busiest as restrictions might ease for travelling. “We have said that it does take three to four months for a sale to complete, so if people do want to be in their house they need to have made an offer by the end of September to be able to complete by December,” she said.

What happens after Brexit?

While the negotiations are still ongoing and there are many issues still to be resolved, one thing that is certain is that Brits will still be eligible to buy and rent out homes in France, as well as stay in France for 90 out of 180 days without the need of a visa.

If they move to France before the end of the transition period, it is expected that their rights will be the same as now, including their residency status, healthcare and uprating their UK state pensions.

According to estate agents Leggett Immobilier, Brits will “still be able to move here [after the transition period], there may be a little more paperwork than would previously have been required.”

Currency Exchange

If you are buying a holiday home in France, it is important to consult a specialist foreign exchange company such as Universal Partners FX right from the start. UPFX can help you manage currency fluctuations by fixing the rate, as the final price of your home could vary significantly from the time you made your offer.

When moving large amounts of cash, it is best to get in touch with UPFX’s currency specialists where they can offer you competitive exchange rates and the best value for your money. Find out what your money is worth by giving them a call or requesting a free quote.

Sterling fell to a one-week low against the dollar on Tuesday following the release of disappointing data confirming that British economic recovery will be slow.

Neil Wilson of Markets.com said that “Sterling extended a selloff after the GDP numbers disappointed”: “The UK is already seeing what a non-V recovery looks like. GDP growth rebounded 1.8% in May, which was well short of the 5.5% expected. In the three months to May, the economy contracted by 19.1%. Some of the numbers are truly horrendous and it’s hard to see how the economy can deliver the +20% rebound required to get back to 2019 with confidence sapped like it is and unemployment set to rise sharply.”

GDP numbers

The Office for National Statistics reported that the Gross domestic product rose by 1.8% in May after falling 20.3% in April, and a 6.9% in March. This was due to the reopening of businesses with factories and construction workers returning to work. Britain’s manufacturers increased their output by 8.4% while the construction sector grew by 8.2%.

However, City economists forecast a 5.5% rise in growth for May. Additionally, the last quarter, the economic slowdown has been worse than expected. The data today shows that the UK economy contracted by 19.1% in the March-May quarter.

Jonathan Athow, Deputy National Statistician for Economic Statistics, says: “Manufacturing and house building showed signs of recovery as some businesses saw staff return to work. Despite this, the economy was still a quarter smaller in May than in February, before the full effects of the pandemic struck. In the important services sector, we saw some pickup in retail, which saw record online sales. However, with lockdown restrictions remaining in place, many other services remained in the doldrums, with a number of areas seeing further declines.”

Services sector disappoints

The services sector fell by 18.9% in the last quarter and production shrank by 15.5%, according to the ONS. There was a 37.8% fall in education and a 31.4% drop in health output. Food and beverage service activities contracted by 69.3%. Manufacturing output fell 18.0% in March-May and the transport equipment manufacturing dropped by 45.7%.

Economists

Jeremy Thomson-Cook, Chief Economist at Equals PLC, said that that there are few signs of the UK economy recovering quickly: “May’s run of GDP, industrial production and services sector activity confirms that it’s easier to fall down a lift shaft than walk up a flight of stairs and the ongoing economic recovery will need many more months before any vague sense of normality is restored. There are few signs that the UK economy is close to anything resembling a v-shaped recovery although we expect that June’s data will be better than May’s which have shown little more than a false dawn.”

James Smith, Research Director of the Resolution Foundation, says that economic recovery from the Covid-19 has started: “Today’s data tells us that the UK economy started to recover as lockdown restrictions were eased in May. But what would normally be seen as strong growth in May of 1.8 per cent mainly reflects the depth of the lockdown’s economic damage, rather than a swift or V-shaped recovery. The economy was still just three-quarters of the size it was as recently as February. While we should expect strong immediate bounce backs in many sectors, such as retail which grew by 12 per cent in May, what recovery we actually see from here will depend on how people respond to the easing of restrictions and, crucially, the course of the public health crisis. Ultimately, the UK economy is unlikely to return to close to its pre-covid economic path until a vaccine or treatment is found.”

Indeed, the figures are dire and the challenge great. The chancellor of the Exchequer, Rishi Sunak, said that the numbers “underline the scale of the challenge we face. I know people are worried about the security of their jobs and incomes. That’s why I set out our Plan for Jobs last week, following the PM’s new deal for Britain, to protect, support and create jobs as we safely reopen our economy. Our clear plan invests up to £30bn in significant and targeted support to put people’s livelihoods at the centre of our national renewal as we emerge through the other side of this crisis.”

If you are sending money abroad and are worried about currency volatility, please get in touch with Universal Partners FX. UPFX’s dedicated foreign exchange specialists can help you access the most competitive exchange rates and make your currency transfers stress-free.

Buying property  in Spain, France, Portugal, Italy and Greece is back in demand, with property site Rightmove reporting 1million searches in one day.

As travel restrictions ease, interest in buying property overseas has reignited with the number of Brits searching for a place in the sun rising. The top five property locations for Brits are Spain, France, Portugal, Italy and Greece, according to search data from Rightmove last month.  

Rightmove sees a surge in interest in European destinations

Rightmove’s Miles Shipside said: “Lockdown has allowed many people time to re-appraise their lives, which has prompted lots of home-hunters to get serious about buying elsewhere in Europe. In particular, countries such as Spain, France, and Portugal have cultures that are familiar to us, and their warmer climates and reasonably priced rural stock will appeal to those who have been recently denied foreign travel.”

He added: “Social distancing would be far more straightforward if you’re lucky enough to be able to afford your own overseas pad. If other holiday-makers feel the same, then they may wish to rent your property, helping it bring in an income when you are not there. It’s still early days as we’re not out of lockdown yet and most airlines are still shut, but this is an indication that this has been a life-changing period for many who are re-appraising both how and where they want to live.”

According to Rightmove, enquiries to estate agents overseas reached the highest level since last June, with the number of new users on “Rightmove Overseas” being 41 per cent higher than the same month last year. Rachel Beaton, an overseas property expert at Rightmove, said that with the easing of the travel restrictions the demand for overseas homes rose to “record-breaking levels.”

Particularly, searches for property in Spain increased by a quarter compared to last June, with many estate agents reporting a surge in online browsing and enquiries for overseas homes in the month of June.

Estate agents at Savills told financial website This is Money that “its most viewed home online in Spain over the last month was a remote five-bedroom £572,475 home in Andalucía, complete with sweeping views of the surrounding countryside, 10 hectares of land, a large swimming pool and an olive tree lined driveway.”

Spanish digital platform allows Brits to apply for a mortgage online

With interest in Spanish property rising, Spanish retail bank, CaixaBank, is providing its online platform HolaBank for Western European citizens considering buying a property to apply for a mortgage. The new digital platform comes after the release of digital mortgage application MortgageNow, another service which allows potential international buyers of Spanish property to apply for a mortgage from their country. Clients eligible to use the MortgageNow are European residents with an interest in purchasing a property in Spain.

 

In 2019, the Spanish Land Registry reported more than 62,000 property purchase agreements, particularly focussing on the Mediterranean coast, a number that represents 12.5% of the national total.

If you are considering buying your dream home, you should contact a foreign exchange specialist to assist you with transferring your money abroad, explain currency exchange, and hedge your funds from unpredictable currency movements. Get in touch with Universal Partners FX so you can have peace of mind when sending a large amount of money overseas. If you want to schedule ahead and safeguard your funds, talk to one of their foreign exchange experts today.

Brits buying property abroad and looking to experience that unique Mediterranean atmosphere, sun-kissed beaches, and European heritage have often turned their gaze towards the majestic Portugal. A great alternative to Europe’s overpopulated cities, Portugal has been the choice for many expats looking for their second home abroad.

However, with recent reports suggesting that Portugal will not be on the initial list of air bridges from UK, there has been a clamour from many tour operators and holiday makers alike to ensure that this is not the case come tomorrow when the list is announced. These demands may fall on deaf ears, but it highlights how Portugal is a real favourite amongst Brits as a holiday destination. This is for many reasons, first and foremost, Portugal is England's oldest ally since 1147 when English crusaders helped King Alfonso I capture Lisbon from the Muslims.

Famous for its national drink, port, beaches and dramatic scenery, Portugal is also an affordable destination, and the second best in value after Bulgaria. Younger generations have heard of the Livraria Porto bookstore in the Portuguese municipality of Porto, which has inspired the Hogwarts Library in JK Rowling’s Harry Potter books, while older ones are enthralled by its rich history, being one of the oldest states in Europe.

Portugal combines contemporary lifestyle with antiquated charm, and despite the recent financial crisis, the country has managed to recover, offering expats attractive tax and residency incentives and low mortgage rates.

Buying property in some of Portugal’s most popular locations

Whether you’re looking for a holiday home, your dream property to retire to or an investment, Portugal offers a variety of properties at different locations and prices. From Algarve’s beaches and golf courses, to Lisbon’s hip neighbourhoods and Porto’s famous wineries, Brits have many choices depending on the kind of lifestyle they want to experience and their budget.

Algarve’s property developments in such resort towns as Vilamoura and Quinta do Lago are sought after and expensive. A two-bedroom apartment can be up to €360,000 while a three-bedroom villa can worth around a million. Prices might be the same in Western Algarve, but, there, life is quieter as in the fishing town of Lagos where property prices range from €200,000 to €5 million. In the booming area of Eastern Algarve, properties can be cheaper, and you can find some attractive opportunities in the town of Tavira where country villas can be around €450,000.

Lisbon’s Blue coast, Costa Azul, is one of the most peaceful areas with such fishing villages as Sesimbra and Sines, most famous for its cuisine and seafood restaurants. Here, you can find five-bedroom villas ranging from €1-3 million or a three-bedroom house for €200,000.

Townhouses and apartments in developments can be a cheaper alternative, with the latter offering communal facilities such as pools and gardens with shared maintenance costs.

Financing your dream home in Portugal

If you are not transferring funds or re-mortgaging your UK home, you will need to consider your borrowing options, such as taking a Portuguese mortgage against a property. The larger amount of cash you deposit the easier it will be to secure a loan at a reasonable interest rate. You will need to also have in mind currency fluctuation as you will be better borrowing in the same currency you will be repaying the loan.

Currency Exchange

This is why, it is important to consult a specialist foreign exchange company such as Universal Partners FX right from the start. UPFX can help you manage currency fluctuations by fixing the rate, as the final price of your home could vary significantly from the time you made your offer.

When moving large amounts of cash, it is best to get in touch with UPFX’s currency specialists where they can offer you competitive exchange rates and the best value for your money. Find out what your money is worth by giving them a call or requesting a free quote.