Sharp fluctuations in the pound-to-euro exchange rate have been triggered by major events such as Brexit and the Covid-19 pandemic. This has prompted people with property in Europe to consider selling up and transferring their euros to a UK bank account, leading them to research which bank has the best foreign exchange rate.
Since the UK voted to leave the EU, the pound has at times lost up to a fifth of its value. A month before the Brexit vote, £1 equated to more than €1.27. More recently, the pound-to-euro exchange rate has been hovering around the €1.14/€1.15 mark, and at one point it even dropped to €1.0511, a rate not seen since the global economic crisis of 2008. However, compared with a month ago, the pound is still an average of 3.4% firmer against other major currencies.
The weak value of sterling against the euro has led to steeper costs for anyone from the UK holidaying in Europe, but it has also meant those selling property there stand to benefit when they convert the proceeds of their sales from euros to pounds.
If you are thinking about selling up, or have recently sold a property in Europe and need to transfer euros to a UK bank account, it’s important to try to keep transfer costs to a minimum, especially if you are sending a lump sum back home. There are many reasons other than property sales that you may wish to repatriate funds, such as property maintenance, pension payments or helping out with school fees. Or it might be that after enjoying the culture of another country, you’re missing home and are preparing for your return. Here are our top tips for sending money back home.
Find the best pound-to-euro exchange rate
Exchange rates can vary considerably depending on who you use to make your currency transfer, but what is the best place to change euros to pounds? Never just go for the first provider you find without checking how their rates compare with the competition. Many people want to know which bank has the best foreign exchange rate, but actually the cheapest way to transfer euros to pounds is often to look further afield than your typical UK high-street bank. This is because they do not specialise in this service and it can cost as much as £30 per transfer.
Using a provider that offers competitive exchange rates could potentially save you thousands of pounds if you are transferring a significant sum back to the UK. For example, the Telegraph’s International Money Transfers service, provided by foreign exchange specialists moneycorp, gives buyers access to great exchange rates that translate into real savings.
Beware exchange rate fluctuations
Remember that property sales can take several months, and during this period there is the risk that the value of sterling to the euro could move against you. One way to protect yourself against currency market fluctuations is to consider a forward contract.
This means you can secure a pound-to-euro exchange rate for up to two years. Bear in mind however, that if you lock into a rate and it weakens further, you won’t be able to benefit. Forward contracts may also require a deposit. It’s always a good idea to speak to an expert to help you decide the right time to transfer your money. Specialist providers have dedicated experts available who will be able to guide you based on your individual requirements.
Make sure your funds are safeguarded
Generally larger currency brokers must by law be authorised by the city regulator the Financial Conduct Authority (FCA). Companies authorised by the FCA must keep your money separate from company funds, so that in the event the company runs into financial difficulties, you’re more likely to get your money back. You can easily check whether a company is FCA regulated. Smaller currency brokers will normally need to be registered with the FCA rather than authorised. This means they might choose to keep customer funds separate from company funds, but they don’t have to. It’s therefore vital to always check what safeguards are in place before making a large money transfer back to the UK so you have peace of mind that your funds will be protected.
Check transfer fees
Use a high-street bank to transfer funds back to the UK and you’ll often be looking at steep charges which can eat into your cash. You may also need to pay a fee from the bank that receives the funds.
Specialist currency brokers usually have much lower fees, so always compare costs before making your transfer to make sure you have found the cheapest way to transfer euros to pounds.
- Enjoy competitive exchange rates, plus your no transfer fees when you use The Telegraph International Money Transfers service
The above article was created for Telegraph Financial Solutions, a member of The Telegraph Media Group. For more information on Telegraph Financial Solutions click here.
*Information correct at date of publication