Poor manufacturing, construction and house price data made the Pound vulnerable at the start of last week against the Euro. Property investors purchasing in Europe however will be pleased to hear that after dipping as low as 1.11 on Thursday, the Pound has more than compensated against the single currency after Europe held interest rates at 1.25 percent and Trichet suggested that it will be some time before European rates rise again. As some had conversely believed that interest rates in Europe would rise either this month or next month, Sterling managed to shoot up to the 1.14s against the Euro by the end of the week on the back of the news. This extreme level of movement on Thursday and Friday just goes to show how important it is to speak with me at Currency Solutions so I am able to alert you to these kind of sudden moves in the markets.

It is hard to yet say whether the Euro will continue to weaken. The scale of currency movements last week however were very significant and did suggest that the tide could be turning – alongside the interest rate hold was the Portuguese bail out plans in the headlines. The Euro also dropped by 3.3 percent against the Dollar over the course of the week. The US Dollar became the main benefactor of the sudden Euro weakness, with Sterling losing out by 2 percent to the Dollar over the week as a whole. This is not good news for those UK based property investors needing to send funds to the US so it is important to keep an eye on the rates. Unfortunately, the Dollar did manage to solidify its position at the end of last week with much better than expected non-farm payroll data – this is often considered the most insightful type of employment data in the US and could be treated as a key indicator that the US economy is picking up. Should the Dollar continue to strengthen there is always the option of using one of our protective trading options such as a forward contract to fix your rate of exchange in advance and be certain of the cost of your investment to you in Sterling.

For this week, Wednesday will be an important day for Sterling with both the trade balance and the quarterly inflation report due. The inflation report in particular is interpreted by markets in order to make more detailed guesses about when an interest rate hike will be made – should the report suggest that inflation is set to accelerate therefore, we could see some Sterling strengthening. Equally however, if it looks like inflation is creeping back down, markets may continue to choose the Dollar over the Pound. European GDP figures on Friday might help ascertain whether the Euro will continue to be rocked should they come in lower.

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.