The impact of the US elections on the exchange rates

The last two weeks have been marked by significant political and economic developments across the globe, including the unveiling of the new UK budget, crucial bank rate decisions in both the UK and the US, and, of course, the highly anticipated US election.

These major events occurring in such a short timeframe have resulted in notable volatility within the foreign exchange market. But how could this volatility benefit you? Following an action-packed week, FX markets are changing rapidly, and it seems the euro has taken a particularly hard hit.

Sterling buyers – GBP/EUR

The GBP/EUR exchange rate reached a new 32-month high of 1.2097 on Monday 11th, fuelled by Donald Trump’s presidential victory and the recent unexpected announcement that German Chancellor Olaf Scholz had dismissed his finance minister, leading to the collapse of the governing coalition.

So, what does this mean for those looking to buy euros? It’s an opportune moment! To put this into perspective, the GBP/EUR exchange rate has appreciated by 5.76% year-to-date. This means that a dream €500,000 property in France, which would have cost £438,100 a year ago, would now cost you just £413,300. That’s a savings of over £24,000!

This favourable shift presents a significant opportunity for sterling buyers, making it an exciting time to consider investments in euros.

US Dollar buyers – USD/EUR

The USD/EUR exchange rate has experienced remarkable upward momentum recently, driven by a strengthening dollar against most major currencies in the wake of the election. This combination of dollar strength and euro weakness has propelled the USD/EUR to breach a 12-month high, appreciating nearly 3% in just one week!

For American buyers considering a €500,000 property in France, this shift means they would pay approximately $13,450 less today than they would have just a week ago. That extra cash could be just what you need to purchase that dream car in France as well!

How can you make use of these market movement?

Using a currency specialist opens the door to many options. It gives you access to competitive exchange rates and the expertise of experienced foreign exchange professionals who can help you plan your transfer to make the most of your money. They understand your situation and support you by tracking the rate and guiding you on the best time to trade, helping to make your money go further.

Here are a few tools available to you and how they can benefit your currency exchange:

• Spot contract: An agreement between you and your FX provider to exchange money and buy foreign currency at the current exchange rate. This is the most common and traditional form of currency exchange, suited to addressing any imminent currency transfer needs you might have.

• Market order: Using a market order, you can target a rate of exchange, and if that rate is hit, the funds can be bought automatically or with your permission. Similarly, a limit order can protect your transaction if the rate falls below a certain level. This suits those with flexible timing who are optimistic that the rate might improve within their timeframe.

• Forward contract: This allows you to fix a rate of exchange up to two years in advance of payment. This tool is popular among property buyers as it allows them to fix the full price of the property ahead of completion, giving them peace of mind and certainty about how much they will pay. It is also a great way to take advantage of a positive rate movement (note that forward contracts may require a deposit).

To take advantage of the exchange rates, it is key to plan in advance and get in touch with a currency specialist early in the process.

At Moneycorp, you will get assistance throughout your journey, from the moment you start looking for a property and planning your viewing trips to when you secure a property and have to pay the deposit and plan for completion.

Getting familiar with the exchange rates will help you set up your budget prior to putting in an offer. Contacting a foreign exchange specialist will help you understand your options and protect your budget from negative fluctuations – at no cost to you.