Last week was a chaotic one, with Greece’s debt problems hitting the news more than ever and speculation rising that the Eurozone is going to have to significantly adapt to survive in the long term – with some believing that it’s possible that certain nations may end up leaving the Eurozone.

You won’t be surprised to hear that all the commotion allowed Sterling to grow on the Euro by a whopping 1.98 percent over the course of the week. This is of course, good news for anyone thinking of purchasing property in Europe. We start the week, with Sterling up to a rate of 1.162 on the Euro, which by recent standards is a very good mid-market rate. Don’t forget that you can lock into a preferable exchange rate in advance of your transfer by calling me to discuss a forward contract. Last week’s movement was not only due to a lack of clarity emerging about plans for the Euro-zone bailout fund following the G20 meeting, but also due to the European Central Bank reducing interest rates on Thursday. Interest rates were taken down from 1.5 percent to 1.25 percent and some commentators believe that a repeat move could be taken next month.

This is good news to the ears of those hoping that the Pound will continue to grow on the Euro; although interest rates in the UK are still comparatively low (at 0.5 percent) monetary policy in the UK is starting to look relatively more stable than in Europe which could help make the Pound more attractive and cause it to strengthen. The fact that European interest rates have been rising is something that has kept Sterling on the back foot for a long time.

As ever however, it is not all plain sailing for the Pound. Whilst Sterling accelerated on the Euro last week, it diminished against the Dollar by 0.6 percent meaning we start this week at around the 1.603 level. This is partly because it tracked the beleaguered Euro against the Dollar but also because there are still question marks over the UK economy and whether it is heading back into recession. Weak data from the UK manufacturing and services sectors this week did not help to dampen this concern.

As markets continue to await for better confirmation about what is happening with Greece’s bailout deal, its tricky to know which way exchange rates will turn over the coming week so this will be a key issue to watch out for. There is also some hefty UK data due - on Tuesday in the areas of manufacturing and industrial production and on Wednesday, the latest figure about the UK trade deficit will be another key indicator of how likely it is that the UK is heading back to recession. The Bank of England’s monthly policy decision is then due on Thursday – were there to be any kind of increase again to the amount of Quantitative Easing being used to shore up the economy, Sterling could be vulnerable. If there is no change, perhaps Sterling can push up again on the Euro at least for a second consecutive week.

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.

The Pound rallied for a second week in a row on the US Dollar, gaining by 0.77 percent. This kick-starts the week with Sterling at the mid-market rate of 1.64 on the US currency – the highest levels seen for seven weeks. It also managed to re-gain some of last week’s losses on the Euro, to improve its mid-market position against the single currency by 0.49 percent rising to the 1.14 levels.

The Pound’s surge on the Dollar in fact predominantly came on Friday, after it had tailed off somewhat mid-week. The Dollar was sapped by a range of factors at the end of the week, including the release of GDP figures in the US. These revealed that economic growth had taken place at a rate of just 1.3 percent in the second quarter - well below forecasts for a 1.8 percent increase. This was particularly put down to the slowest rate of growth in consumer spending in the US for two years due to unemployment and rising petrol prices which does not bode well for the US economy. Whether the Pound will continue its ascent on the Dollar into this week may well be influenced by whether the US Government reach an agreement about raising the debt ceiling in order to allow more money to be borrowed and avoid a default in the US – this ongoing issue has been putting downwards pressure on the Dollar as it represents a very serious concern not just for the US economy, but global markets. Comments from officials to the press have suggested that an agreement is now very close – however, this was the same message that was circulating over last weekend so it’s best to keep an eye on how this develops whatever currency exchange you need as the developments may impact much more than the US Dollar.

In Europe, no sooner had the conditions of Greek debt been re-agreed in as I reported in last week’s blog, than some fresh nerves about Europe’s debt crisis have surfaced. Moody’s investors put Spain’s credit rating on review for a possible downgrade as well as actually downgrading the rating of Cyprus. Another agency, Standard and Poor’s, lowered the rating of Greece indicating that the flow of financial woes from nation to nation is still perceived as a threat to economic stability.

Sterling therefore had a positive week despite some poor data out of the UK – in particular the fastest declining retail sales in a year. The currency did receive its first boost last week from a jump up in GDP figures. These revealed that the economy grew by 0.2 percent in the second quarter – although this number sounds marginal, it was in fact better than some economists has expected and most important was not a negative figure. The Pound’s situation is certainly still precarious with so much global uncertainty and we are likely to see continued volatility as the summer continues.
This week sees the run of UK PMI data coming out in manufacturing, construction and services which can often have an impact on Sterling, as the pieces of data spread over three days give a good broad picture of the economy. UK and European interest rate decisions take place on Thursday – most are expecting that both will now hold interest rates but it is worth checking the situation on Thursday as if Europe went for another rate hike, there may be some Euro strengthening at Sterling’s loss.

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.

Bank of England policymaker Paul Fisher dovish tone kept alive the prospect of more qualitative easing in the UK. This has dropped Sterling to a session low against the dollar and the euro this morning.

Pound Sterling – UK Markets

Fisher said if Bank of England policymakers saw mid-term inflation turning into deflation, they may have to consider more quantitative easing. He added QE was very much on the table as a policy option.

The pound depreciated 0.5 per cent to 1.1274 against the euro as of 9:48 a.m. in London, the weakest level since June 10. Sterling declined 0.1 percent to $1.6179 and 0.2 percent to 129.77 yen.

The forecast for the coming months remains gloomy. Britain ran up a record budget deficit in the first two months of the fiscal year despite a slightly larger than expected drop in borrowing in May, highlighting the tough road ahead for the government.

US Dollar – US Markets

The U.S. currency touched an almost one-week low versus the euro before Fed policy makers begin a two-day meeting amid signs the world’s largest economy is losing momentum.

A report that’s predicted to show new home sales in the U.S. slumped in May, adding pressure on the Federal Reserve to keep interest rates at a record low.

“The problems of the U.S. far exceed Europe’s despite all the focus on Greece and the peripheral economies,” said Grant Turley, a senior currency strategist at Australia & New Zealand Banking Group Ltd. in Sydney. “The Fed doesn’t look like it’s going to be in a position to raise rates well into 2012, and that will keep the U.S. dollar under pressure.”

Euro – European Markets

The Euro softened in the morning as Euro-zone finance ministers failed to reach an agreement that would release the next tranche of 12B euros and would prevent Greece from defaulting on its debts.

Nevertheless, the EU backed the development of a second bailout for Greece and as a result the Euro erased the losses against the dollar and closed little changed at 1.4303.

Other Currencies – Highlights

The bond market is signalling doubts about Japan’s recovery from a record earthquake even as the Bank of Japan lifts its assessment on the economy.

The central bank last week raised its monthly economic assessment for the first time since February, as policy makers saw signs of a rebound. Data yesterday showed exports dropped by more than economists estimated in May, as Prime Minister Naoto Kan struggles to assemble a second supplementary budget before fulfilling a pledge to step down.

Nigel Hodges Currency Solutions

Rife speculation around Greek debt throughout last week did not manage to damage the Euro against Sterling. On the contrary, dire figures from the manufacturing sector in the UK last week (the worst in twenty months) building on the weak confirmed GDP figures of the week before, showed their impact on the Pound which lost out a very significant 2.73 percent to the Euro over the course of the week.  You won’t need me to tell you what a huge amount of money 2.73 percent is on a property purchase or sale. If you do happen to be selling an overseas home and bringing Euros back into Sterling then now really is the time to make the transfer – even if the exchange will not happen for several months, I can forward book the exchange for you at the current rate with just a ten percent deposit of the total. If however, you need to make a Sterling to Euro transfer you will be wanting to know if there is much news on the horizon that may help bring the Pound back up on the single currency.  The big event of the week will be the clash of the European and UK interest rate decisions on Thursday. Should we see the Bank of England make a hike up from 0.5 percent or the European Central Bank raise interest rates from 1.25 percent, we could well see the respective currency gain ground. Before this, we have the producer price index and investor confidence out in Europe on Monday, retail sales on Tuesday and GDP figures on Wednesday. With UK industrial and manufacturing data on Friday this could well be a volatile week for this currency pairing with significant data out every day. Please give me a call to discuss any transfers involving Euro and Sterling as I’m happy to keep an eye out for your target rate of exchange or help protect you from fluctuations throughout this week.

Against the Dollar, we are starting the week with the Pound sitting at the 1.64s. Although the currency has not managed to retain the levels of 1.65 seen two weeks ago against the Dollar, it is important to remember that it suddenly surged to these levels from 1.61 so despite losing out 0.51 percent to the US currency over the past week, we are still in a relatively strong position for the month as a whole. Although data from the UK, particularly in the area of manufacturing, has pulled the Pound down, the tail end of last week also bought some very bad data from the US economy so there is the potential for some volatility. In particular, the non-farm payroll figures which give a view into US employment patterns were much below forecasts with unemployment also creeping up. Moody’s ratings agency have also commented that they may put the US triple A credit rating on review for downgrade unless more is done to tackle debt by mid July – this could be a real blow for the Dollar should the downgrade occur and confidence be lost. The best way to catch the spike in your favour (such as the 1.65 levels seen recently) is to speak with me at Currency Solutions so I can watch the rate for you - and even set an automatic market-order on your behalf. It is important to remember however that we are still at fairly strong levels at the current rate of 1.64 so it may be worth you calling to get a quote on your exchange with me if you need a Sterling to Dollar transfer and haven’t done already – particularly if you are risk-averse and more keen to make sure you don’t miss out on the going good rate.

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.

In my last two weekly blogs, I had reported that at last the mighty Euro had begun to cave in to the widely discussed pressures of sovereign debt allowing Sterling to gain back some ground - whilst the Dollar had begun to strengthen considerably leaving Sterling behind.

The last week saw a change in tone with Sterling appreciating 0.2 percent on the Dollar and all in all remaining almost flat against the Euro, moving down by only 0.08 percent on the single currency albeit with a few twists and turns along the way. This was largely due to the fact that many fears surrounding the meeting of EU Finance ministers at the start of last week were expelled. Some worried that the arrest of Dominique Strauss-Kahn would lead to meeting delays or conclusions not being reached about the Portuguese bail-out. As soon as the green light was given for the Portuguese bailout however, some pressure was instantly taken off the Euro. There are still ongoing concerns that Greece will have to restructure its debt but the more severe downwards pressure that we have seen on the Euro the previous two weeks seems to have subsided for now.

This is not what those needing to transfer Sterling into Euros for a European property investment will want to hear. Sterling actually had some strong data last week. Apart from better retail sales spurred by the Royal Wedding and warmer weather, the news that inflation had risen in April to as high as 4.5 percent where only 4.1 percent was expected gave some help to the Pound – this is also the sort of data that could provide more ongoing momentum long term as it only adds to the pressure on the Bank of England to raise interest rates. However, the Bank of England minutes on Wednesday from the last policy meeting two weeks ago, revealed that there is still only stagnant support for a rate rise and it will take more votes to make this happen. Once more, the split in voting was three in favour of an interest rate rise against six who voted to maintain the interest rate at 0.5 percent. There was a time when economists were predicting the hike could come as early as May yet support is not growing.

The UK is still however streets ahead of the US where there is an increasing view that monetary policy will be kept loose for some time yet. This was particularly true this week where after two bounteous weeks of growth, the Dollar stalled in its tracks and reached a plateau as a raft of negative economic data swept in to counteract its rally. Poor data came in the form amongst others of a weak New York economic index, housing starts falling by 10.6 percent, industrial production remaining flat where growth was expected and sales of existing homes also unexpectedly fell. It is now thought unlikely that the US will start to raise interest rates this year at all meaning that there is potential for Sterling growth on the Dollar as the months roll on.

Events to look out for this week will be public sector net borrowing in the UK on Tuesday revealing the state of national debt as well as all important GDP figures on Wednesday giving an overview of how well or not the first quarter really went.

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.

In last week’s blog, I reported that the time was ripe for booking Sterling to US Dollar transfers, with rates moving up towards 1.63. We are still in a relatively strong position against the US Dollar so anyone UK based buying property or sending funds to the US has not yet missed out.

Sterling rates against the Euro on the other hand, have swung down with the Pound at some of the lowest rates for five weeks against the single currency so this is a key time for those purchasing property in Europe to use me at Currency Solutions to help them keep an eye on the rates.

As has been widely reported in the press, rates between the Pound and the Euro are being largely driven by discussions over interest rates at present. Last week saw Trichet speak on behalf of the European Central Bank after the interest rate meeting – although interest rates were held at 1 percent as was expected, it was Trichet’s comments that sent the Euro higher. Whereas until last week, there was an expectation that a rate rise in the UK would come before a rate rise in Europe, the tables are now turning as Trichet suggested an interest rate rise in Europe might come as soon as next month.

The currency markets are never simple however and there are a multitude of other factors at play to be aware of in the Sterling Euro relationship. Whilst the hype over interest rates may continue to maintain the Euro’s strength in the near term, the sovereign debt problems with several Euro nations are still lurking in the background. Just this morning, the Euro was slightly shaken as news emerged that Moody’s Investors were downgrading Greek Government debt. With nations such as Greece trying to re-negotiate the terms of their debt with the European Central Bank, it’s important to remember that fiscal policy and debt tends to return time after time to haunt Europe – and indeed the Euro. The hype over an interest rate rise in Europe therefore may only compensate for some of the serious underlying problems in patches in the long term. The rate against Sterling will also depend on whether the UK interest rate hike – currently ear marked for early summer – is moved any further forward pending discussion at this Thursday’s rate meeting and the next set of Bank of England minutes in two week’s time.

Anyone who needs a Sterling transfer to Euros is best advised to speak to me at Currency Solutions to discuss target rates and protecting yourself from volatility. If you have Euros to bring back into Sterling, then now is a great time to book the transfer and take advantage of the rates.

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) 20 7740 0000 or by clicking HERE to leave an enquiry.