As the pound surges, opportunities are opening up for UK property investors. The pound has gained 2.3pc against the dollar this year, ahead of all other major economies in the G10 financial group. And with further interest rate hikes on the horizon, the UK currency is expected to continue to gain speed.
The Bank of England is expected to increase interest rates by 0.25 percentage points on Thursday, bringing the rate to 4.5pc. There is a more than likely chance that June will see a similar-sized hike. With this, consumer price inflation is predicted to decelerate sharply in the coming months, defying gloomy predictions previously cast by economic experts.
Over the last month, the Bank of England has improved its economic outlook, whilst the Office for Budget Responsibility says the UK will escape a recession after all.
Francesco Pesole, FX strategist at ING:
Along with the improvement in the economic outlook, sterling is definitely drawing benefits from the market’s conviction that the Bank of England will need to continue raising rates.
The UK’s hardy housing market is also having a positive impact on the pound. House price growth is decelerating, but the market appears to be making a relatively soft landing, with a drastic price correction appearing less likely than before.
Better still, mortgage rates are finally stabilising, and there has been an increase in approvals across the UK. The number of properties for sale is also slowly rising as sellers adapt to market conditions.
Thanks to a bolstered economy and signs of a resilient housing market, the sterling is currently trading at $1.26, having gained 3pc against the dollar in the last month alone. Meanwhile, the euro has a value of just 87p. With this, the pound is nearing a one-year high against the dollar and a five-month high against the euro.
The pound has gained 2.3pc against the dollar this year, ahead of all other major economies in the G10 financial group. Citi predicts that the pound could increase to $1.30 by the start of 2024.
A surging sterling is great news for UK property investors as it means homebuyers are getting more value for their money. Furthermore, with the pound soaring against the dollar and the euro, UK buyers can get a lot more for their money in other major world markets—making overseas property investment an attractive venture.
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