Stronger Sterling For Euro Property Buyers in Spain

Latest Financial and Currency News from Halo Financial: As suspected, Sterling had rather a good day yesterday. The economic growth data (the change in gross domestic product to give it its proper name) was spot on forecast and at 0.3% growth was a slight improvement on the first estimate published a month ago. That, combined with further details of the UK government’s spending cuts and the Queen’s speech outlining the rest of their plans was enough to give Sterling a boost. It finished the day at higher levels against all comers. The lack of UK data today should prompt a bit of profit taking and that began even before the UK markets had closed yesterday.
The Euro was on the back foot all day yesterday while the debate about what is going to happen to the euro rages on. The financial support package is seen as no more than a sticking plaster (band aid) to mask the structural problems of the Eurozone. One commentator put it neatly, (in comments I read last night but can’t find this morning) so my apologies for the plagiarism but I can paraphrase his comments as, either the Eurozone needs to integrate fully on a financial basis or the Euro needs to be abandoned. It is a stark warning that fits my belief from day one of the Euro’s establishment. The member states were always fearful of taking that final step towards full currency integration; that of combining fiscal policy. And now that we have been through the last year of Eurozone drama, I find it highly unlikely they will be tempted to do so; well certainly the Germans won’t. However, Pier Carlo Padoan, the chief economist of the Organisation for Economic Cooperation and Development (OECD), said this morning that the weaker Euro is good news for the Eurozone and it may even be responsible for the EU avoiding a double dip recession. It’s a bold assertion but we have a long way to go before we can be certain the Eurozone is in a permanent path to recovery.
Elsewhere, the US Dollar remains the currency of choice amongst investors and traders alike. US consumer confidence hit a two year high this month; slowing job losses and stable inflation will have helped in that and the confidence that international investors have in the American government’s ability to both repair the economy and repay debt is keeping the US Dollar in demand. The Sterling - US Dollar exchange rate remains in a band between $1.42 and $1.45 and seems set to stay there until it is removed with a crow bar.
Overnight news that the Australian economy is in bullish mood came from the Westpac leading indicators index which posted its greatest gain in four months. However, this data is for March and a lot has happened in the interim including the Reserve Bank of Australia being cautious enough to virtually confirm they are not raising interest rates any further and a cooling of commodity prices which account for a large proportion of Australia’s exports. The Australian Dollar strengthened initially but that pace has slowed. However, I still think we will see another dip to A$ 1.72 or lower on the Sterling - Aussie Dollar exchange rate as the lack of UK data weighs on the Pound.
The Sterling - Canadian Dollar exchange rate has moved higher and consolidated in the last five days or so. It is back above the C$ 1.52 level that was a significant support level through March, April and early May. C$ 1.56 was the resistance level for that period so we have to be hopeful we will see another test of that line in the days ahead. Tensions in Korea, the failure of a Spanish Bank and a drop off in the recent high commodity market prices are all weighing on the Canadian Dollar but it does remain a very attractive economy in comparison with most others, so I am not expecting a massive dive in the value of the Canadian Dollar.
And finally, I don’t know if you clicked on Google’s main page in the last few days but the tribute to Pac Man’s 30th birthday was a playable version of the game. It was great and I must admit to having a sneaky play when I first saw it. All those nights in local pubs playing the table top version of the game shone through and I was pretty good at it even if I say so myself. Apparently I was not alone. It is estimated that 549 years of man hours were used up on the day as each visitor to the page stayed for an average of 3 times longer than normal. ‘Addictive’ is just too small a word for it. Gawd help us when it is Tetris’s birthday.... Or Donkey Kong’s...or Space Invaders....or Frogger’s... or Asteroids....

Hotel Expansion in Arguinguin Gran Canaria

The Rezidor Hotel Group has announced that it will open a new hotel on Gran Canaria, Spain in 2012. The Gran Canaria Radisson BLU Residence will be a short distance from the village of Arguineguin and contain 144 apartments, all offering a sea view. Rezidor Hotel Group operates more than 190 Radisson BLU hotels in the Middle East, Africa and Europe, including Radisson BLU hotels in Oslo, London, Copenhagen, Stockholm and Gothenburg. "We are very pleased with the continued growth in Spain, where we recently opened the first Radisson BLU hotel in Madrid," says Kurt Ritter, president and CEO of Rezidor Hotel Group. "This opening also underlines our commitment to an ambitious growth of our young and stylish portfolio of hotels." "We are pleased that we can expand our cooperation with Rezidor and are confident that we will provide increased value to the Gran Canaria tourist industry, " added Lars Wenaas, owner of the new hotel.

This and other long term investments confirm faith in the Canary Islands as still being a popular destination for many tourists. Property prices have fallen by 6% less than mainland Spain, another good indicator. GoldAcre Estates of Mogan, Gran Canaria have also noticed a steady increase in enquiries for second homes.

Gran Canaria is one of Europe's southernmost outposts and is located just 150 kilometers from the north west coast of Africa. With a mild year round climate, Gran Canaria is a popular holiday destination for travellers to Spain and the island is famous for its idyllic beaches and stunning landscape.. The new Radisson BLU Residence will be located on the south coast of Gran Canaria along the oceanfront, near the popular village of Arguineguin. This is one of the most sought after locations on the Island, and the World Metrological Society believe it has one of, if not the best climates in the world.The hotel will offer a modern recreation area with pool, tennis court and a complete spa. At the hotel customers will also find five meeting rooms and a separate section for those who need to work while on vacation. About the Rezidor Hotel Group The Rezidor Hotel Group is one of the fastest growing hotel chains in the world. The Group has a portfolio of more than 385 hotels in operation or under development with over 83,000 rooms in 62 countries, including luxury hotels in London, Paris and Rome. Rezidor operates the brands the Radisson BLU Hotels & Resorts, Regent Hotels & Resorts, Park Inn and Country Inns & Suites in Europe, Middle East and Africa. Under a global licensing agreement with the classic Italian fashion house Missoni, operates and develops Rezidor also the new lifestyle hotel chain Hotel Missoni.

Sterling at 1.166 Euros and UK Property Sales Increasing

What Does the higher Pound and increasing UK property prices mean for property buyers in the Eurozone and Canary Islands? Halo Financials latest report reads:
We live in very interesting times. The markets were loving the almost imminent agreement between the Lib-Dems and the Conservatives as evidenced by the strength of the Pound which rallied by two cents against the Euro and for cents against the US Dollar during Monday but those loving feelings were dashed when Gordon Brown was forced to announce his resignation in order to allow a dialogue between the Lib-Dems and Labour. Sterling slumped on the news. I am sure Gordon thinks that was because he was leaving and everyone was sad but, at the risk of disappointing our soon to be ex-Prime Minister, it was much more evident that the fall of the Pound had more to do with the ‘cuts later’ approach that the Lib-Dems and Labour prefer when they talk about the UK budget deficit.
Today is seen by many as being crunch time for the parties to agree a deal and it may well be that the party which received the most votes and won the most seats doesn’t get into office and the other possible outcome is a Lib-Dem /Labour coalition which would be a minority government with plans to delay tackling the budget deficit until next year. Sterling is not going to react well if that is the outcome.
The other major play of yesterday was the finalisation of the agreement within the EU and with the aid of the International Monetary Fund to stump up three quarters of a trillion Euros to avoid the Greek debt crisis pervading the rest of the Eurozone. Their efforts were bolstered by a massive cash injection by the US authorities as well but the debate still rages over whether this will stop the rot and whether it would be enough if the problem started to spread to the obvious candidates of Portugal, Spain and Ireland. These three plus Greece have, rather disparagingly been referred to as the PIGS and grouped together because of their fragile economic conditions. The announcement of the rescue package was initially greeted with Euro weakness against the Pound which was being bolstered by the hope of an agreement between the Lib-Dems and the Tories but as that deal looked more shaky and the questions started over whether the rescue plan was big and robust enough, Sterling slipped and the Euro was flattered by the effects. Against the US Dollar though, the Euro had rather a good day but these short term moves mask the longer term problems with the current arrangements. The Eurozone appears to be a little too happy to bend its own rules for most market participants’ tastes and the packages of measures outlined are less a cohesion of the Eurozone alliance than they are protection of some members against some others. That is an odd kind of gang to belong to and recent events have virtually destroyed the premise of the Euro as a reserve currency; an aspiration that the founders of the Eurozone held and an ‘inevitability’ that was being espoused as recently as the end of 2009.
For its part, the US Dollar has been exceedingly volatile in the last few days as it has been bought and sold by knee jerking international investors. Frightened about the Eurozone? Then buy US treasuries. Think the Eurozone problems are near resolution? Then sell the US Treasuries and buy something with a greater yield. The seesawing action that these swings produce and which will often take days to play out, has been very evident in a very short time span. Further uncertainty is almost inevitable and further volatility will follow.
I had an email yesterday from someone who, having read the Daily Currency Insight, said “None the wiser about the Long term” and having read the report back, I must admit I didn’t outline a long term projection. The reason is that with the two major UK and European stories still very unclear and mixed data coming from the US and elsewhere, long term planning is very much a lottery right now. Chart wise, the Pound ought to start to gain strength from here and it is in an uptrend against the Euro but perhaps a less obvious one against the US Dollar. Sterling is though at the very bottom end of its trading ranges against the likes of the Australian, New Zealand and Canadian Dollars at is as low as it has been against these three for roughly a quarter of a century. Logically, we should see a turnaround in the Pounds fortunes against these three as well but when their economies are so much more robust than the UK’s and their government debt is a mere fraction of Britain’s, there are no guarantees that the Pound will make headway any time soon. So short to medium term planning is the best you can do or you have to make a decision based on all the available evidence and remember not to kick yourself if hindsight proves you acted prematurely. Teh problem is that in order for us to get a lonmg term forecast right,we need politicians to do the right thing! I rest my case.
There have been other news stories though; a monthly Royal Institution of Chartered Surveyors survey released overnight showed a net balance of 17% of surveyors reported a rise in UK house prices in April compared to just 9% in March but the British Retail Consortium reported a fall in high street sales. So if people are getting more for their houses, they certainly are not spending it on the high streets. We also had a non event in the guise of the Bank of England interest rate decision. No change in rates or quantitative easing levels and no press conference meant their meeting barely registered on the markets. Today’s big data releases are the industrial production and manufacturing output numbers. The weaker Pound may have helped in both regards but Sterling is unlikely to react while the government decisions are still in abeyance.
And finally, as we in the West live in an age where shamelessness is no longer a sin but more likely a route to celebrity status, a lesson in decorum comes from China where a chap called Xiao Chen, 25, a was walking to a river in Chongqing for a late night swim but became entrapped in a boggy patch full of duckweed. He had his mobile phone with him but didn’t call for help because he was too embarrassed at being caught in this predicament. And even when rescuers got to him and asked him to remove his trousers so they could drag him out of the sucking mud, he refused because he would not like to be seen in his undergarments. A man with standards; a rare commodity these days.