In this article I will tell you why the pound may rise against the euro in 2017, cutting your costs to buy a Costa Blanca property.
Do you intend to buy a property on the Costa Blanca? If so, whether you've got your eye on a 5-bedroom chalet with a swimming pool in Suan Juan Playa for 1,590,000€, or a 550 m2 chalet with a terrace and a garage in San Juan de Alicante for 1,800,000€, you'll want the best exchange rate.
After all, if the exchange rate is flying high, you'll receive more euros when you transfer money to your Spanish bank account, to buy your ideal Costa Blanca property! With this in mind, what's in store for the exchange rate in the 2nd half of 2017, and how might it benefit you? Well, let's see.
1. Sterling may strengthen, as the Tories pursue cross-party support.
The good news is that sterling could well strengthen versus the common currency later this year, making buying a Costa Blanca property more affordable for you. The pound may strengthen, first because it's thought that, following the UK election, the Conservative government will be much more moderate.
The Tories may be moderate, because they lost seats at last week's vote, meaning that the Conservatives now depend on other parties for support. In turn, this may oblige the Tories to pursue policies that all of Parliament agrees on, lifting the UK economy, and sterling too!
2. The euro could weaken, as the European Central Bank maintains its stimulus.
What's more, the euro could lose out in the coming months, also making buying your dream Costa Blanca property less costly for you. Why? Well, because the European Central Bank (ECB) looks set to keep interest rates at 0.0%, while maintaining its huge monetary stimulus, for the foreseeable future.
For instance, just last week ECB president Mario Draghi said that "a very substantial degree of monetary accommodation is still needed.” In turn, this could weigh down the common currency, benefiting you when you transfer money to Spain to buy a property on the Costa Blanca!
3. The euro could lose out, as Greece's debt crisis re-ignites.
Moreover, the euro may also struggle, making buying a Costa Blanca property less costly for you, because Greece's debt crisis has re-emerged. For instance, just this week, Greek Economics Minister Dimitri Papadimitriou said that "Greece is being made a sacrificial lamb", and that German finance minister Wolfgang Schaeuble is "dishonest".
This is dragging down the euro, because if Greece struggles to reach a deal to reduce its massive debt load, it may be forced out of the euro. In turn, as the common currency drops, purchasing your ideal Costa Blanca property becomes cheaper for you!
With all this in mind, sterling looks set to rise against the euro in 2017, making this the ideal time for you to buy a Costa Blanca property!
By Peter Lavelle at foreign exchange broker Pure FX http://www.purefx.co.uk