On Thursday 23rd June, there will be a referendum on whether the UK should remain in the European Union (EU). A referendum within two years was promised by David Cameron in the Conservative Party's manifesto for last year's general election.
The single currency started the week on a firm footing as the markets digested the changing fortunes of the European Union vs that of the UK and the USA. Now that Europe’s economy has overtaken the growth rate of the UK and the USA, the Euro has certainly found some short-term favour.
Remember the old adage, ‘don’t put all your eggs in one basket’? Many investors have been guilty of casting their nets too close to home when it comes to getting a good return on their investments.
Despite the low-growth world, many companies are still able to offer their shareholders positive ‘guidance’ on future earnings – via dividends. So it has become very popular to invest a large proportion or all of your money in UK and large multinational companies that are offering good dividends, but sometimes you can get your figures burnt.
The Euro has gained favour over the course of the week, partly on improving Eurozone economic conditions but also by default as the US dollar declined to an 11 month low against a basket of currencies.
The US Federal Reserve left rates steady at 0.25% - 0.50% with the wording of its policy statement suggesting that it is now more relaxed than a few months ago about the state of the global economy. With the American economy clearly slowing down, prospects for a Federal Reserve interest rate hike in the near term have weakened.
Figures from the latest United Nations migration report* indicate that more than 5million people born in the UK have emigrated overseas.
Many of them will need to send money back to the UK from abroad. They may be paying school or university fees, supporting a mortgage on their British home or selling a property overseas and need to repatriate the funds. Some may be returning home after working or retiring overseas.
Whatever the reason for sending money back to Britain, you will need to exchange your foreign currency for sterling. And to make sure as much money as possible comes back home, it’s important to get a highly competitive exchange rate.
Since joining the European Economic Community in January 1973, which later became the European Union (EU), the UK has had an uneasy relationship with the project.
Its commitment has been tested several times over the years. More recently, the marriage has hit the rocks and may be about to break down completely.
Residency from A to Z - Eurofinesco explores the concept of Residency, and how it touches the lives of residents in Portugal.
A change of fortunes this week with the British pound gaining ground against the single currency as the week progressed.
Bank of England Governor Mark Carney was keen to share his view on the UK’s current position and future prospects during his Economic Affairs Committee speech. He made strong reference to the negative economic implications should the outcome of the UK’s EU referendum vote be Brexit.
Carney indicated that the Bank of England still has room for conventional monetary measures, which may be called upon should UK economic conditions flounder after a Brexit outcome, although there is no appetite at all to dip into negative rates territory within the Bank of England’s Monetary Policy Committee. So the message is clear, interest rates in the UK could be tweaked below the current 0.5% level. No doubt opinion poll releases in the run up to the poll date of the 23rd of June will hold sway for sterling.
