Every month the Bank of England reports how many mortgage loans were approved by banks and building societies. The figure for October was 67,701, the highest number since February 2008. The news coincided with the Bank’s announcement that it will no longer be subsidising mortgage lending after January next year because it wants to prevent the market becoming overheated. There is nevertheless a rush of expatriates buying houses and flats in the UK as a precaution against being priced out of the market upon their eventual return.
Part of their concern will stem from the rising value of the pound. In the last month, three months, six months and nine months sterling has been the top performer among the world’s dozen most actively-traded currencies. Over the last 12 months it is second to the euro, but only by a couple of cents.
The pound has done well since its plunge at the beginning of the year. Back then there was concern that Britain’s economy was doomed, that recovery was unachievable, that the Bank of England would end up owning the entire stock of UK government debt (it already owned a third of it). That view has changed dramatically because the data show Britain’s economic recovery progressing more strongly that anywhere in North America or continental Europe, with the possible exception of Switzerland.
In summer the (then) new governor of the Bank of England, Mark Carney, set out his stall for monetary policy. The Bank Rate would remain at a record low at least until unemployment fell below 7% and unless inflation threatened to stick above 2.5%. Investors chose to interpret his words as a promise that interest rates would head higher the moment unemployment fell to 7%. There is still an element of that thought process at work; if inflation ticks up or unemployment falls the pound goes up. But the game has moved on. Investors are now looking at the UK’s broader economic performance and have decided it is better than anything the opposition can put up.
They see the central banks in America and Japan continuing to print money at a furious pace. They see the European Central Bank fighting the threat of deflation by halving its Refinancing Rate to 0.25%. They see the Swiss National Bank continuing to depress its currency by maintaining a SFr1.20 floor for the euro/Swiss exchange rate. They see the Bank of Canada fretting about its own brush with deflation; an inflation rate as low as Euroland at 0.7%. They see the Reserve Bank of Australia and the Reserve Bank of New Zealand going out of their way to talk down the value of their currencies.
And they see the governor of the Bank of England telling Parliament’s Treasury Committee; “This economy is the strongest major advanced economy in the world.” It’s a difficult argument to ignore.
For more information about these and the other options that are available to help send money to and from France as efficiently as possible call the experienced and friendly team at Moneycorp. You can call straight through to the trading floor on 0044 20 7589 3000 and quote “Sextant” to benefit from great rates and first transfer free (usually £15 over the phone and £9 online).
Call +44 (0) 20 7589 3000 (Open 7:30am – 7pm Monday to Friday UK Time)
Moneycorp are Sextant French Properties preferred currency partner and have been selected due to their great rates, great service and great solutions. These are some of the reasons they have transacted over two billion pounds for their clients.
Moneycorp has been in the business of moving money between countries and currencies for over 30 years and offers money-saving foreign exchange to customers ranging from blue-chip businesses to private individuals. We make money transfers simple and help you to manage foreign exchange rate movements.
Moneycorp also offer a number of different contract options for Sextant clients including a forward contract where you can fix a rate of exchange for a period in the future using just a small deposit, perfect to help take the risk out of the currency markets and budget for your French property purchase.