Chaos in Europe has allowed the Pound to push up by 1.09 percent over the past week against the Euro so that it currently sits at a very attractive mid-market exchange rate of 1.251 on the single currency. The Pound’s own vulnerability to problems in Europe, as well as further weaknesses in the UK’s own economy, has seen Sterling slip down by 0.99 percent on the US Dollar to a rate of 1.566.

If you are a UK based property investor therefore, the going is good for making a Pound to Euro transfer with some of the best rates seen in three and a half years which may well continue. If you need to make a transfer from Pounds to US Dollars however, you may want to start thinking about how you can protect yourself against further losses as the Dollar is set to strengthen on the back of European problems. If you have a transfer coming up, using a forward contract to secure an exchange rate now, may be an option you want to consider.

To explain why we are seeing these kinds of exchange rates, starting with the situation in Europe - concerns about Spain’s finances have reached new levels after Catalonia, Spain’s wealthiest region, has called for central Government financing to help with its 13 billion euro debt. This adds to ongoing anxiety over the political turmoil in Greece in the run up to the second round of elections in June. With some fearing that Greece may need to leave the Euro, investors are pulling funds out of the single currency and putting them instead in ‘safe-haven’ currencies – namely, the US Dollar.

This movement has left the way open for Sterling to rise on the Euro despite the UK’s own internal problems, whilst falling against the US Dollar which will continue to be the main benefactor of investors turning their back on the Euro. Economic news from the UK was poor last week and did not incite much confidence in the state of the economy. The Bank of England minutes outlined the risks to the UK from Europe due to close trading links, and then GDP figures confirmed that the UK is back in recession. The GDP figures were even worse than expected confirming the negative growth in the economy in the first quarter of 2012, was revised from the initial estimate of – 0.2 percent, to – 0.3 percent. Added to all of this, UK retail sales slowed down the most in two years.

This is not a pretty picture of economic health and so many investors are expecting that at some point the Bank of England will have to revert to more quantitative easing. This would de-value the Pound so is also putting some downwards pressure on Sterling.

Events which we expect to bring more movement to exchange rates this week include UK mortgage data as well as consumer confidence figures on Wednesday. These releases fall on the same day that European consumer, economic and industrial figures are released.

Thursday sees UK house price data as well as GDP figures from the US, followed by UK Manufacturing data and European unemployment figures on Friday. If you’d like me to watch the exchange rates on your behalf or to get a quote for a transfer at any time, please just get in touch.

For further advice on 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.