Sterling climbs to two-year high against dollar

Photo credit  Images_of_Money

The pound has enjoyed a promising run of late, with positive data for the UK economy and rising house prices helping to bolster GBP against other currencies. That trend reached a peak this week as sterling reached an two-year high of 1.64 GBP/USD, creating affordable conditions for UK buyers looking to invest in US real estate.

As mortgage rates rise, making US property more expensive for domestic house hunters, the market is particularly favourable towards cash buyers, who make up the majority of overseas investors.

Richard Way, Editor at The Overseas Guides Company, told TheMoveChannel.com: "Rates have risen a full percentage point since May, peaking in August at 4.6 per cent, after the Federal Reserve signalled it might slow its bond purchases by year end."
 
He added: "At the start of December, the average rate on a 30-year loan jumped to 4.46 per cent from 4.29 per cent, while the average on the 15-year fixed loan increased to 3.47 per cent from 3.30 per cent.
 
"Carefully chosen properties in prime locations in Florida remain in demand and cash buyers are in the ideal position to benefit."

The two-year high was recorded on Tuesday 10th December, but sterling has since slipped back against the dollar following profit-taking pressure and improvement from the euro. Nonetheless, GBP has enjoyed a positive period and remains almost 5 per cent higher than six months ago, notes Reuters.

"In the near term, the momentum does look a bit weak for sterling and in favour of the euro given the less dovish stance of the ECB," Yujiro Gato, currency strategist at Nomura, told the news agency.

"But in the medium term we are bullish on sterling over the euro given the different economic outlooks for the euro zone and the UK. To us, sterling will still be the best-performing European currency."