As anticipated, Sterling’s movement throughout the past week has mainly revolved around what decisions were announced following the European Summits.

European leaders have agreed to strengthen the European rescue fund and have also unveiled a new plan for Greece. The result of this on the global currency markets, has been to restore confidence in the Euro, allowing it to make steep gains on other major currencies. Against Sterling, the Euro grew by 0.72 percent over the course of the week. This means that Sterling starts the week at a rate of 1.139 against the Euro. It is thought that currency investors had been using Sterling as a temporary safe-haven until clarity emerged about decisions made over the European rescue fund so we are now seeing a reversal.

This is not to say that the single currency will necessarily continue to strengthen on the Pound in the long term as the economic situation in Europe is still fragile. The Euro did actually move down from its highest point on Friday when Italy issued expensive ten year debt which caused the surge of optimism to dampen a little. It will be interesting to see over the coming week, how Thursday’s monetary policy decisions in both the UK and Europe affect the rate of exchange as both respective currencies have a potential threat to their strength.

For the Euro, the threat is that a reduction in European interest rates is expected to occur at some point this year which is likely see Euro weakening. Although most economists are not expecting an interest rate reduction to come until at least December, if comments made on Thursday suggest that this is on the cards, the Euro could see some downwards pressure. The threat to Sterling is that the introduction of more Quantitative Easing (filling the struggling economy with more funds to help it rebuild strength) could be supported yet again by the Bank of England policy members. If this occurs, it is likely to add downwards pressure to the Pound. How these two factors will affect the Euro-Sterling tug of war will emerge on Thursday morning.

Sterling’s movement against the Dollar over the past week makes for much more pleasant reading, with the Pound accelerating by 1.12 percent. This means that Sterling starts the week at around a seven week high of 1.612 against the Dollar and has logged one of its best monthly performances against the Dollar since April. This is despite fears for the ongoing weakness in the UK economy, and consumer confidence coming in at its lowest levels since 2009 due to anxieties over a return to recession.

Stay updated with Sterling’s performance particularly on Thursday this week when the monthly monetary policy decisions are announced by the Bank of England and European Central Bank. Feel free to give me a call if you would like me to watch the rates for you or to get a quote on your transfer.

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.