What impact are Brexit, the Yellow Jackets and Donald Trump’s Twitter account having on foreign exchange rates and the French property market? We speak to Foremost Currency Group to get the low down on how it impacts your buying process
Is now really a good time to buy in France? With so much uncertainty surrounding the lead up to Brexit, the threat of trade wars, the Gilet Jaunes protests and Donald Trump’s erratic foreign policy, we thought it would be a good idea to speak to Joe Mayhew, Head of Asia-Pacific FX at the Foremost Currency Group to find out.
- Home Hunts:What can you tell us about the current status of the foreign exchange market that would be useful for Home Hunts buyers?
Joe Mayhew:GBP/EUR has remained broadly within a six-point range over the last 18 months or so- with lows of around the 1.10 level and a short-lived move higher to 1.16. A major cause for this range is the continued uncertainty surrounding Brexit.
The resulting drama of the posturing between Westminster and Brussels tends to be the driving force in sterling prices at the moment – particularly GBP/EUR. We are likely to remain within this range until some of the uncertainty around Brexit clears, and as we move closer to 29 March it becomes all the more important to remain vigilant.
Knowing that GBP/EUR has been largely conforming to a particular range means that we can help clients plan effectively for any future purchases.
- HH: Is now still a good time to buy in France from an FX point of view?
JM:It is a very attractive time to buying in France for a number of different international clients. For British clients, at the time of writing, GBP/EUR is very close to the top of the range mentioned earlier. At the end of January GBP/EUR was sat at an eighteen-month high.
Whilst we are slightly off of those peaks now, with the spectre of Brexit now under two months away, it’s a fantastic time for clients to begin speaking to a currency specialist, so they can assess their needs, before we potentially get into eleventh-hour negotiations with the EU.
US clients can be similarly encouraged by recent exchange rate movements as EUR/USD has moved twelve cents in their favour in the last twelve months.
- HH: What global events (trade wars, Brexit, giles jaunes protests, for example) could affect exchange rates and how could this impact property investors?
JM:There are a number of political and economic events taking place globally that are having a profound impact on FX rates. Brexit, of course, remains a huge focus for British clients who are considering moving internationally.
The Irish backstop remains a significant sticking point for the UK parliament and the EU, and the route to a managed Brexit still remains somewhat precarious. There doesn’t seem to be any serious discussion at the highest level around a “people’s vote” so the remaining options left, if a deal cannot be agreed, would be to either accept a “hard Brexit” or defer Article 50 and prolong the process.
Outside of the UK, Donald Trump’s Twitter account remains an enduring source of shock and awe. The FX market tends to pay most attention to his courtship of Far-Eastern despots, his fondness for walls and the ongoing trade saga with Xi Jinping rather than his lambasting of “Jeff Bozo”, among others.
In Europe, France’s political situation still draws attention with the “yellow vests” challenging Macron’s ability to maintain control of a country appearing to be increasingly disaffected by his leadership.
Italy, too, has been testing the EU’s fiscal patience, continually attempting to push through spending reforms that contravene the EU’s rules and bidding to assume Greece’s mantle as the Enfant Terribleof Europe.
- HH: How has the euro been affected by Macron’s rise to power in France?
JM:Initially Macron’s appointment had offered support to the euro as he was seen as a pro-EU stabilising force when compared to his rival Marine Le Pen. Le Pen’s Front National (now Rassemblement National) identifies as a right-wing euro-sceptic party and their rise to power could have been read as confirmation of a broader global-swing towards populism and anti-EU sentiment in Europe.
Fast-forward twelve months and the emergence of the “mouvement des gilets jaunes” has seen a stark reduction in Macron’s approval rating. These protests haven’t had an immediate cause/effect relationship with the euro’s price and while this is not a major cause for concern now it will certainly be a key theme to watch in French politics moving forwards.
- HH: What nationalities of overseas buyers are most likely to be attracted to buy in France right now in light of favourable currency pairs with the euro?
JM:France remains a hugely desirable location for a large majority of our clients. British clients will always form a large demographic of those looking to buy in France – attracted by the location, cuisine, culture and a shared interest in sports like rugby.
That sterling has remained buoyant in the face of all the recent political uncertainty has ensured that buying in France still remains extremely attractive to the British.
Another standout group of clients we have seen buying in France are those from the US. Earlier in the article we discussed the move down in EUR/USD from 1.2550 to 1.13.
To put this move in monetary terms: the purchase of a €1 million property in January last year would have cost $1,255,000.
Today, the same property would cost $1,130,000 a reduction of $125,000 in one year just through foreign exchange movements alone.
- HH: If you had to give some currency advice to buyers looking for luxury property in France at the moment, what would it be?
JM:The most important factor for HWNIs buying overseas is to get in touch with a currency specialist early in the buying (or selling) process. It has become very fashionable in the FX industry to move clients towards online platforms to service their own needs. Whilst this is fine for smaller regular transfers, where small differences in the exchange rate have a negligible effect on the overall cost of your purchase, when affecting larger transfers these incremental differences in prices have an enormous impact on the overall cost of purchasing luxury items.
Any client that enquires with Foremost Currency Group is assigned their own Senior FX Broker to help service their needs. By getting to know their client’s budget, timescales and currency pairs, we tailor bespoke strategies to help maximise their exchange.
Getting in touch earlier in the process also allows clients more time to survey the various contract options available. Their broker will help guide them through these options (like fixing an exchange rate in advance) to help them plan their purchase effectively.
Our experience working with respected partners like Home Hunts means clients can leverage our combined knowledge and form a trusted team to help support them through the buying process and let them focus on the more enjoyable aspects of living in France.
If you are searching for a luxury property in France talk to Home Hunts today on +33 (0)970 44 66 43about your property needs and we will connect you with our contacts at the Foremost Currency Group so you get the best financial deal possible