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.

After a rather wet and windy bank holiday weekend it appears we may now be in the eye of the storm. With little news rearing its head out of the US and UK we may well be focusing purely on what is likely to happen next in Greece. Chances are all talks of restructuring have been thrown out the window so we are now awaiting the EU’s final move.

Pound Sterling

Don’t be surprised to see sterling tail away today and perhaps into tomorrow. This is mainly due to the lack of economic data that has surfaced due to yesterday’s bank holiday.

The only morsel of economic news worth mentioning from the bank holiday weekend is that growth forecasts have been cut by the British Chambers of Commerce. Whilst we expected growth of around 2.3 percent, this prediction for 2012 has been cut to 2.2 percent. Such revised forecasts will be seen as dovish by investors and thus the markets are likely to suffer.

Dollar

Similar to the UK, yesterday was a Memorial Day bank holiday in the US which meant there was little economic data being released. However, a report released today has stated that home prices fell by the most in 16 months during March. This coupled with an increase in home renters in the market have caused the dollar to fall.

With housing making up approximately 40 percent of the consumer price index and a rise in interest rates unlikely, an increase in the number of renters along with soaring gas prices could see inflation soar throughout the rest of the year.

Euro

The euro gathered momentum this morning, helped by talks of a second bailout for Athens and general US Dollar and sterling weakness. There has been serious debate over the last couple of weeks as to whether or not Greece will require total debt restructuring. However, reports suggest that European leaders are simply going to ‘throw money at the problem’.

Furthermore, Germany has once again stepped up to the plate. This morning saw the power nation report retail figures came in 3.7 percent above expectation. This has seen the single currency gain quite substantially against the majority of its counterparts.

Other Currencies – Highlights

The New Zealand Dollar climbed to record highs against its major counterparts on speculation the Central Bank will increase interest rates. This coupled with speculation of a Greek bailout package will increase demand for higher yielding assets that include both the kiwi and Aussie Dollar’s.

However, whilst the New Zealand Dollar is performing very well, the Australian Dollar has had its reins pulled back as reports showed their economy probably shrank last quarter by the most in two decades. This was more than likely due to floods that swamped coal mines and farmland.

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.

This week we are seeing a continuation of similar currency trends as reported in last week’s blog – once more, Sterling has lost more ground to the Dollar whilst managing to claw back against the Euro. This has been largely caused by intensifying speculation over the extent of debt problems in Greece just as a Portuguese bail out heats up. Markets finally glanced away from their intense focus on interest rates as they digested Trichet’s comments that the next European rate rise will not be immediate. Things also came to a head this Monday as finance ministers met up to talk about sovereign debt issues to the backdrop of the widely reported arrest of the head of the International Monetary Fund, Dominique Strauss-Kahn, which has led to some uncertainty over leadership and whether financial measures such as those affecting Portugal may be delayed. These issues tarnished the positive GDP data from Europe at the end of last week which revealed that GDP had grown faster than expected.

Those needing to purchase a property in Euros should therefore be aware that Sterling has gained 0.39 percent on the single currency over the past week. This was not without the usual twists and turns however with the currency falling down to the 1.11s against the Euro on Sunday before rising again on Monday. I have an increasing amount of clients selling properties in Europe who need to make Euro conversions back in to Sterling. If this is you, then we need to keep an eye out for these sudden movements as the sort of sudden rate seen on Sunday is great for a Euro - Sterling conversion. One way that you can make sure that you do not miss a rate, even if is touched momentarily, is to use an automatic market order – this means that if your target rate of exchange is hit even when our office is closed overnight or at the weekends, the money will be automatically exchanged for you. Feel free to give me a call to discuss whether this could be a good option for you and how it works.

It was another weekly drop for Sterling against the Dollar which benefited even more from Euro weakness than the Pound. This will not come as good news for those purchasing investments in the US. The fall was quite hefty with the Pound falling by 1.04% on the newly robust Dollar. Better than expected farm payroll data from the US in the previous week had helped the currency and the positive inflation report from the Bank of England, cementing opinions that a UK interest rate hike will happen later this year, was not enough to overcome the newly unstoppable Dollar. Although both the UK and US trade balance figures last week showed worse than expected deficits, the UK’s figures were particularly short of forecasts.

The biggest event for Sterling this week will be the Bank of England minutes on Wednesday. Markets will be rushing to find out whether there was any new support for a rate hike revealed in the voting patterns of members – if this were the case, Sterling is likely to receive another upwards push against the Euro.

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.