Exchange rates are constantly on the move. These movements can be especially noticeable around main events as BREXIT or COVID. Back in March 2020 when the pandemic started we saw the GBP/EUR rate dropping from levels of 1.20 to 1.05 which left some potential buyers involved in European transactions in a real risk with some of them forced to pull out or to complete on properties at a much higher cost than anticipated.
Most recently if we look at the Sterling Euro fluctuations we can see that back in May £1 was equivalent to £1.14 whereas just less than 3 months later the rate went to levels above 1.18. If you were looking to buy a property in France with a €250,000 budget, in August you would have got an extra £7,500 to spend!
The volatility on the exchange rates can pose a big risk to your budget and therefore it is important to account for it from the very beginning. However fluctuations can also present an opportunity to improve your budget if the rate movement is in the right direction. If that happens being able to act quickly to take advantage of that movement is key.
Exchange rate movements can happen quickly and last for a short period – even seconds!- so if you want to monitor the market to manage your budget you need to be ready for it.
What can you do to be ready?
If you haven’t done so yet, you should get in touch with a foreign exchange specialist like moneycorp and open an account early in the process and before you travel to France to view properties. Opening an account doesn’t involve any cost or obligation but will give you access to free expert guidance and currency tools to monitor the market and your budget.
If you find a property you can consult the rates straight away and as soon as the initial contract is signed you can plan the best way to manage the process until completion which could take a couple of months.
At this stage some clients decide to fix the whole budget via a forward contract as we explained in previous articles however others –optimistic on the direction the market might take if there is for instance a Brexit deal in the horizon- might decide to target a better rate of exchange though a market order.
What shall I consider when placing a market order?
- With a market order you agree with your dealer a rate of exchange –higher than the current market one- and if such rate is achieved your order is automatically fulfilled and your Euros are bought at that price.
- The advantage of a market order is that it allows you to take advantage of a rate movement even if this happens quickly, briefly or whilst we are not at the office.
- Once the order is fulfilled you won’t be able to change it. This means that if the rate moves even higher after your level has been reached you won’t be able to change it.
- You can combine a market order with a stop limit order that allows you to protect your transaction to go below certain rate. This orders could be handy for those property buyers that have calculated their price taking into account a range below which the purchase price might become unaffordable or too costly.
With a Platinum Trusted Service Award 2020 from independent review site Feefo and 40 years of experience in the industry, FrenchEntree has been recommending moneycorp for more than 15 years. During this time they have helped thousands of client planning the best way to pay for their property as well as supporting them afterwards with any further payment from paying bills, mortgages to repatriating UK pension payments for those who have retired to France.
Furthermore, we have worked with the same person at moneycorp for more than a decade! You might be familiar with her as she often writes for our FrenchEntree magazine. She has 13 years’ experience in foreign exchange, and is a qualified European lawyer with experience in European transactions. Mar will be happy to answer any questions or enquiries to support you through these difficult times
Opening an account is really easy and free of cost. You can register online or over the phone in a couple of minutes and for FrenchEntree there are no transfer fees in any payment.
Lead photo credit : Currency (C) Ibrahim Boran, Unsplash
Leave a reply
Your email address will not be published. Required fields are marked *