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How the 2016 exchange rate could affect the price of Mallorca property

Property in Mallorca

27.04.2016. If you intend to buy a Mallorca property this year, you may already know that a high and mighty exchange rate can really help you cut your costs. After all, if the pound is on the up versus the euro, this means you get a hatful of euros extra, when you transfer money from the UK to Spain. With this in mind, is sterling destined to rise against the common currency in 2016? Well, let’s take a peek.

1.Sterling could hop, skip and jump versus the euro, if the UK votes to stay in the European Union in the upcoming referendum, due on June 23rd.

This would give the pound a nitro boost, as the UK would remain part of the world’s largest trading bloc, clearing a storm cloud of uncertainty from Britain’s economic outlook. In turn, as the pound rises, it’d become better value to buy Mallorca property!

2.The pound may make like a sparrow and fly against the common currency, if the European Central Bank again cuts interest rates.

This would lift the GBP/EUR exchange rate, because it’d be a sure sign that the ECB is desperate, both to prevent the Eurozone’s economy sinking into the mud, and to stop deflation. And this thereby would make buying a Mallorca property more affordable for you!

3.Sterling could soar like Superman versus the euro, if the Eurozone’s migrant crisis gets out of hand.

After all, hundreds of thousands of people have travelled to Europe this year, to escape war in Syria. Yet Europe doesn’t have anything that resembles a coordinated policy to help and house these refugees. If this gets out of hand, the euro could sink, making Mallorca property better value!

Of course, it’s also worth mentioning that the pound to euro exchange rate could stumble, if the UK leaves the EU in June. To protect yourself against this eventuality, set up what’s called a forward contract. This lets you lock in the exchange rate where it’s at today, so that if it falls tomorrow, you still get the rate you’ve locked in. This way, you’re protected when you buy Mallorca property!

Given all this, you’re in an excellent position to make the most of the exchange rate when you buy Mallorca property.

By Peter Lavelle at foreign exchange broker Pure FX http://www.purefx.co.uk

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