The Pound rallied for a second week in a row on the US Dollar, gaining by 0.77 percent. This kick-starts the week with Sterling at the mid-market rate of 1.64 on the US currency – the highest levels seen for seven weeks. It also managed to re-gain some of last week’s losses on the Euro, to improve its mid-market position against the single currency by 0.49 percent rising to the 1.14 levels.

The Pound’s surge on the Dollar in fact predominantly came on Friday, after it had tailed off somewhat mid-week. The Dollar was sapped by a range of factors at the end of the week, including the release of GDP figures in the US. These revealed that economic growth had taken place at a rate of just 1.3 percent in the second quarter - well below forecasts for a 1.8 percent increase. This was particularly put down to the slowest rate of growth in consumer spending in the US for two years due to unemployment and rising petrol prices which does not bode well for the US economy. Whether the Pound will continue its ascent on the Dollar into this week may well be influenced by whether the US Government reach an agreement about raising the debt ceiling in order to allow more money to be borrowed and avoid a default in the US – this ongoing issue has been putting downwards pressure on the Dollar as it represents a very serious concern not just for the US economy, but global markets. Comments from officials to the press have suggested that an agreement is now very close – however, this was the same message that was circulating over last weekend so it’s best to keep an eye on how this develops whatever currency exchange you need as the developments may impact much more than the US Dollar.

In Europe, no sooner had the conditions of Greek debt been re-agreed in as I reported in last week’s blog, than some fresh nerves about Europe’s debt crisis have surfaced. Moody’s investors put Spain’s credit rating on review for a possible downgrade as well as actually downgrading the rating of Cyprus. Another agency, Standard and Poor’s, lowered the rating of Greece indicating that the flow of financial woes from nation to nation is still perceived as a threat to economic stability.

Sterling therefore had a positive week despite some poor data out of the UK – in particular the fastest declining retail sales in a year. The currency did receive its first boost last week from a jump up in GDP figures. These revealed that the economy grew by 0.2 percent in the second quarter – although this number sounds marginal, it was in fact better than some economists has expected and most important was not a negative figure. The Pound’s situation is certainly still precarious with so much global uncertainty and we are likely to see continued volatility as the summer continues.
This week sees the run of UK PMI data coming out in manufacturing, construction and services which can often have an impact on Sterling, as the pieces of data spread over three days give a good broad picture of the economy. UK and European interest rate decisions take place on Thursday – most are expecting that both will now hold interest rates but it is worth checking the situation on Thursday as if Europe went for another rate hike, there may be some Euro strengthening at Sterling’s loss.

For further advice or how to save thousands on your property purchase compared to the bank, protect yourself from currency movements or set up regular mortgage transfers, get in touch with the dedicated Property Secrets currency specialist: Nigel Hodges of Currency Solutions on +44 (0) 207 740 0000 or by clicking HERE to leave an enquiry.