What’s in store for the exchange rate when you rent a Lanzarote villa
27.04.2016
If you’re planning to rent a villa in Lanzarote this year, one thing that brings a bit of extra sparkle to your holiday is if the exchange rate is strong. After all, if the pound is standing tall against the euro, you get an extra fistful of euros to spend when you’re in Lanzarote! With this in mind, what are the odds that sterling will triumph versus the common currency in 2016? Well, let’s take a gander.
1. Sterling could rise above its current 1.29 versus the euro, if the UK votes to Remain in the EU, in the referendum on June 23rd.
This could give the pound a boost, because if the UK rejects Brexit, it would remove the darkest economic cloud currently hanging over Britain’s outlook. After all, if the UK did go solo, it would be detaching itself from the world’s largest free trade zone, a real own goal. In fact, if the UK stays in, sterling could jump back up to 1.43, where it was before David Cameron set the referendum date!
2. The pound may fly above the common currency in 2016, if the UK’s economy continues to outstrip the Eurozone.
This would lift sterling higher, because if the UK’s economic engine is humming nicely, it attracts international investment to the UK. For instance, the UK has been the fastest-growing economy in the G7 since 2013, nippily outpacing the USA, France and Germany. In turn, if this gives the pound a boost, you’d receive more euros when you rent your Lanzarote villa, making your holiday all the nicer!
3. The euro could find itself down and out, if the European Central Bank continues to cut interest rates.
This might leave the common currency flat on its back, because if the ECB slashes borrowing costs further, this sends an ominous signal that Europe’s economy is in a tight spot. Already, Eurozone interests are already at 0.0%, as the ECB is desperate to get businesses borrowing, to spur growth. Fortunately though, the upshot of this is that you’d get more euros to rent a Lanzarote villa!
4. Sterling may struggle, if the UK unexpectedly votes to leave the EU, in the forthcoming referendum.
It would be remiss of me not to mention that, if the UK does opt for Brexit on June 23rd, in spite of all the surveys that suggest Britain will vote to Remain, then the pound could fall. If you’re at all worried about this, your best bet is to exchange currencies ahead of time, while the pound to euro exchange rate is still high and mighty. This will help protect you when you rent a villa in Lanzarote.
So, with all this in mind, you’re in the best position to exchange currencies when you rent a Lanzarote villa!
By Peter Lavelle at foreign exchange broker Pure FX http://www.purefx.co.uk