It has been another volatile week for the Pound. Anyone purchasing a property investment in the US will be pleased to know that Sterling grew by 0.73 percent on the Dollar last week. For those purchasing in Europe however, the story from last week has got even worse – the Pound dropped by 1.66 percent on the Euro throughout the week meaning that we start this  week at the 1.10 levels - some of the worst rates seen in fifteen months for those making Sterling to Euro transfers.

What is managing to make the Euro overpower Sterling in this way? Sovereign debt in Greece was the main issue affecting currency markets last week. Despite the widespread protests as reported in the news, for currency markets, the fact that Greek politicians passed another round of austerity measures, has shored up confidence that the crisis is being dealt with and saw an instant lift in the single currency. As this also helped to increase the ‘risk-appetite’ of currency investors generally, it also helps to explain whilst as the Euro rose, the safe-haven Dollar lost ground as well as other lower-yielding ‘safer’ currencies such as the Swiss Franc.

Sat in the middle of this cross-fire, the Pound therefore demised further against the Euro, whilst managing to gain ground on the Dollar. The US did also experience some negative data which contributed to this, with US consumer confidence figures dropping on Friday.

The ongoing interest rate saga running alongside the Greek situation was also to blame for Sterling’s fall against the Euro. Trichet made comments last week that have led markets to believe that there is a very strong chance that Europe will raise interest rates on Thursday this week from 1.25 to 1.5 percent which is now the official prediction. This is especially significant as the UK interest rate decision takes place on the same day, but rates are almost guaranteed to stay stagnant at the very low 0.5 percent. Whereas a few months ago, it was thought a UK rate rise would take place this summer, the UK is now seen as lagging even further behind in the interest rate race, with a rate hike very unlikely to come until 2012. Very poor UK PMI manufacturing data last week (the worst in 21 months) has only confirmed the view that an interest rate rise will take a long time to occur due to fragile areas in the UK economy.

This does not bode well for Sterling’s movements against the Euro this week so please do give me a call if you do have money to exchange in to Euros any time in the upcoming months as we can discuss your upper and lower target rates of exchange. Since January, Sterling has now dropped by nearly 10 percent on the Euro, which on the price of a property is incredibly significant. This makes it more important than ever to use a currency broker like myself, to achieve a better rate than the banks as well as making sure you are well equipped to book the transfer rate at the best time, given the wide scale currency movements that we are currently seeing. Speaking to me before the interest rate decisions take place this Thursday is advisable.

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.