In August 1662 Fanshawe was appointed Ambassador to Portugal and later to Spain by Charles II. In 1665, Fanshawe’s diplomatic career came to an abrupt end after he accepted a trade treaty between Spain and England without notifying his government; he also failed to induce Portugal to join this treaty as the Spanish wished. In March 1666 he was accordingly succeeded as Ambassador to Spain by Lord Sandwich, who arrived in Madrid at the end of May. He died in 1666 and was buried at All Hallow’s Church in Hertford. Fanshawe’s greatest legacy was his translation of works of literature into English. He published a translation of Guarini’s 'Il Pastor Fido' (The Faithful Shepherd) in 1647 and in 1648 produced a second edition, with other poems and his version of the fourth book of Virgil’s 'Aeneid'. In 1652 he published 'Selected Parts of Horace', followed in 1655 by his translation in the original metre of 'Os Lusiades' by the Portuguese writer Luis de Camoes.
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