The Effect of the Strong Pound in Europe
For those of us living in the Eurozone and earning out of the UK the last few months have been bonanza time. We have seen the Euro steadily rise to the dizzy heights of 1.42 to the Pound.
The Pound has gone from strength to strength in the last week as investors worst fears over Greece fail to materialise at the moment! Also there is strong likelihood of the UK raising interest rates before the end of 2015. The safe bet for the investors and markets is the UK, and with rates about to rise the more likely that Sterling will stengthem even more. Investors will buy into the Pound expecting the value of it to rise in the future.
All this bodes well for Business Broker Spain, our clients from the UK are seeing and will continue to see great value in businesses for sale due to the exchange rate. However our advice is that if you are contemplating a purchase and you have the funds take the 1.42 exchange now. Greece is facing a crisis of liquidity, and this puts pressure on the Parliament to accept the terms offered, and Tsipras would not have accepted terms which he knew his people could not stomach. These rates are essentially gift wrapped and there to take advantage of. Once a solid agreement has been reached we could see the rates back to around 1.37.
For the joy of holidaymakers, expats and people moving to the Eurozone is just oneside of the coin. For British exportors to Europe and the USA, the pain is immense. Many companies have already seen a drop in orders due to te strength of Sterling and any further gains made by Sterling will mean that firms will lose more business.
The only comfort these firms can cling to is that old saying “ what goes up must come down!”