Sterling is in a very similar position to that which I described in my last blog – still holding within sight of a ten month high on the Euro but continuing to drop off against the US Dollar. We start the Christmas week with Sterling at the mid-market levels of 1.191 on the Euro and 1.554 on the US Dollar.

Currency movements are still being completely dominated by the situation in Europe. This means unfortunately that Sterling’s rise on the Euro is not being attributed to perceived strength in the UK economy (although UK retail sales data this week was positive) but rather that investors are seeking alternatives to the risky Euro. This explains why Sterling has managed to gain an impressive 1.77 percent on the Euro over the course of the past week whilst dropping by 0.8 percent on the Dollar which is perceived as much ‘safer’ than Sterling. This is also reflected in the Euro’s drop against the Dollar which is much larger than that against Sterling – a huge 2.57 percent over the course of the past week.

If you are going to need a Sterling to Euro transfer therefore, the message is still very much that there is no certainty about how long this position of strength may last. The Sterling to Euro 1.20 rate is also a key area of resistance that may be difficult for Sterling to break through. On the other hand, with nearly all the credit rating agencies downgrading European banks, and reviewing the ratings of nations such as France, it may be that if the European situation continues to deteriorate, the Pound could gain even more. This will also largely be dependent on whether robust new agreements are formed between political leaders about the Euro zone bailout fund and financial mechanisms to help restore the health of the Euro zone. At present, the main result of the hype in the press about the UK veto-ing changes to the treaty, and lack of unity between nations, is likely to be continued downwards pressure on the Euro.

The Pound hit a two month low against the US Dollar on Wednesday and it will again be news in the Euro-zone that continues to be the main driver of this currency pairing. There will however be a bit more of a spotlight on the UK this week with house prices coming out on Monday and the big event – the Bank of England minutes from the last policy meeting revealed on Wednesday. If this reveals that there is growing support among policy makers to introduce more quantitative easing in the Uk, it could be that Sterling loses some momentum on the Euro. European economic confidence figures and UK GDP figures on Thursday could also bring some movement.

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.