Since the referendum on Brexit on June 23rd 2017, the value of Sterling against the Euro has fallen. At the time of writing it is 1 GBP equals 1.1675 EUR. Whilst this is giving GB Ltd a boost in terms of exports, this is offset against the increasing cost of imports which also leads to a rise in inflation. This, in turn, affects the exchange rate.
For those of us living in Spain, the exchange rate is important. I am often asked, “what is the outlook for the exchange rate?” Yet, it is incredibly difficult to predict what will happen to it. This is because the rate is a comparative rate and what is happening in both countries affects the rate, not just is what is happening in one country.
The good news is that there is a formula to judge what the rate should be, based upon the relative trade between them. This rate, known as the equilibrium rate, is currently 1.26 euros.
So, the Great British pound is currently 8% below the equilibrium rate. However, three more recent surveys from Barclays, Citibank and Nomura are putting the exchange rate by the end of 2017 as 1.30 to 1.33. In part this will be due to the short positions that have been built up during the time between the referendum and the triggering of Article 50 are unwound.
So if you want to know when to move pounds to euros, you may wish to wait. But euros to pounds, you may want to consider exchanging now!!
Speak to Barry Davys for excellent rates of exchange on transfers and how to simplify your currency transfers .