Euro - Sterling

Hi folks,

Am i being a bit naive/selfish/short-sighted thinking that its good news for us owners now the exchange rate is going in our favour?

Some financial sectors are predicting a £1 to 1.40Euro rate by July!

ww

Certainly it is welcome news for those of us who have been used to rates between €1 and €1.1 over the last few years

Suddenly community fees, running costs, car hire, meals out etc and noticeably cheaper. Anyone thinking of buying in cash from sterling will also be in for a bargain if they convert to Euros at the right time

Those who are sitting on property as an investment will not be as pleased as long as prices continue to be surpressed. Clearly now would not be the right time to sell with a combination of low prices and high fx conversion rates, if you need the proceeds in sterling

Should the Euro collapase in the coming weeks/months, then its a whole different picture for us all ........

Waddle,

Not understanding the finanials or what's going on, what do you mean by your last comment "Should the Euro collapase in the coming weeks/months, then its a whole different picture for us all ........"
 

Phil

I think he might mean that if the peseta was to return it would be a very weak currency which means our trips to CDA would be very cheap. If you were to buy a property in Spain then the real cost in sterling would be low. If you were to sell a property in pesetas and convert, you might get more than you had hoped for in pounds. Sounds really good doesn't it. But the real cost for Spain and the euro zone as a whole is an unknown.

Instability in Europe is not a good thing and in reality wars have been fought on less when you consider how much money is involved!

If the G8 countries have any clout then what I have described will not happen and realistically the exchange rate will revert to type and that is £1 to 1 .15e.

Greece - now that's a different kettle of fish!
Jon Faulkner

 Two differnt meanings of ''collapse''

1) The Euro/Sterling exchange rate collapses in favour of sterling. 90% of us probably bought at an exchange rate of 1.40 to 1.50 then had to kit the place out at 1.20, it's then fall back to just above parity before recovering to its current level. The 'proper' trading range (neutral for the sterling and eurozones) would be a trdaing range of 1.20 to 1.40. 1 to 1.15 is just as false as when it was over 1.50.

2) Countries start leaving the Euro e.g. Greece. They have to have a starting exchange rate for their new drachma currency against the euro, sterling, dollar etc (like a new coy floating on the stock exchange). If they start it too high (false rate to keep asset/debt values up to please their creditors then the euro would in all likeliness strengthen against the drachma when market forces take hold. The reason the Euro is flawed is Greece, Spain, Italy, Portugal et al cannot cope with what is a fixed exchange rate against nations such as Germany. The cost of Greece leaving the euro on their own (they account for just 2% of Eurozone GDP) has been estimated at 220e billion to the other European states as Greece's euro assets and liabilities would be re-valued downwards - this would hurt, but lets face it Greece hasn't a cat in hells chance of paying back what they already owe.

Jon, agree with you apart from 2 things: 1)  the 'correct' rate for sterling/euro - but that's an opinion and 2) for all those of us who have bought property in Spain, then if Spain left the eurothen those who have a substantial mortgage will probably do well as debt gets revalued downwards as well as the property, but for those who bought in cash then they will lose a packet in asset value (sterling) if they sold and looked to convert back to sterling, but yes if your income is in sterling then you'll suddenly get more bang for your buck in Spain/Greece etc.

Personally i think Greece will exit the euro but Spain won't coz if Spain leave then the euro is dead.