How does the strong pound help your Cannes property purchase?
If you plan to buy a Cannes property, the rising pound is good news for you because it means you'll receive far more euros when you exchange currencies. In fact, for every £125,000 you transfer to France to buy a property, you'll now receive +€17,000 more than if you'd done so 18 months ago, when the pound was weaker. So, the stronger sterling will add significantly to your euro total!
Why has the pound risen so much?
Sterling is flying high, because the UK economy is faring extremely well next to the Eurozone. For instance, the UK is forecast to grow +3.6% in 2014, according to the Bank of England, while the Eurozone faces economic stagnation and even deflation. So that's lifted the pound, while the euro has weakened at the same time!
Will the pound continue to rise versus the euro?
Moreover, there's an excellent chance that buying a property in Cannes will become even more affordable in 2014, if sterling rises further. Here are 5 reasons why the pound could climb above its 26-month high versus the euro soon:
1. Sterling may rise, because Scotland recently voted decisively to remain part of the UK. This could lift the pound, as it removes one of the biggest economic and political risks for businesses.
2. The pound could jump, because UK joblessness unexpectedly fell -0.2% in July, to just 6.2%, the least since the financial crisis. This may boost sterling, as it demonstrates that the UK job market is flourishing.
3. Sterling may strengthen, because Bank of England governor Mark Carney has repeatedly suggested he will hike UK interest rates early next year. This could help the pound, as higher interest rates make the UK a more attractive investment destination.
4. The euro may fall meanwhile, because recently the European Central Bank has interest rates to emergency levels of just +0.05%, the lowest ever. This may bring down the euro, as it tells us the ECB is desperate to revive Europe's economy.
5. The euro could also decline, because inflation in the currency bloc fell to just +0.4% in August, lifting the threat of Japanese-style deflation. This may hurt the euro, as raises the risk that the Eurozone will suffer a "lost decade", as Japan did in the 1990s.
With this in mind, 2014 is shaping up to be a great time to buy a Cannes property, as the strong pound cuts the cost of doing so!
By Peter Lavelle at foreign exchange broker Pure FX. For free expert currency advice when you buy a property in Cannes, call me on +44 (0) 1494 671800 or email