Poor manufacturing, construction and house price data made the Pound vulnerable at the start of last week against the Euro. Property investors purchasing in Europe however will be pleased to hear that after dipping as low as 1.11 on Thursday, the Pound has more than compensated against the single currency after Europe held interest rates at 1.25 percent and Trichet suggested that it will be some time before European rates rise again. As some had conversely believed that interest rates in Europe would rise either this month or next month, Sterling managed to shoot up to the 1.14s against the Euro by the end of the week on the back of the news. This extreme level of movement on Thursday and Friday just goes to show how important it is to speak with me at Currency Solutions so I am able to alert you to these kind of sudden moves in the markets.

It is hard to yet say whether the Euro will continue to weaken. The scale of currency movements last week however were very significant and did suggest that the tide could be turning – alongside the interest rate hold was the Portuguese bail out plans in the headlines. The Euro also dropped by 3.3 percent against the Dollar over the course of the week. The US Dollar became the main benefactor of the sudden Euro weakness, with Sterling losing out by 2 percent to the Dollar over the week as a whole. This is not good news for those UK based property investors needing to send funds to the US so it is important to keep an eye on the rates. Unfortunately, the Dollar did manage to solidify its position at the end of last week with much better than expected non-farm payroll data – this is often considered the most insightful type of employment data in the US and could be treated as a key indicator that the US economy is picking up. Should the Dollar continue to strengthen there is always the option of using one of our protective trading options such as a forward contract to fix your rate of exchange in advance and be certain of the cost of your investment to you in Sterling.

For this week, Wednesday will be an important day for Sterling with both the trade balance and the quarterly inflation report due. The inflation report in particular is interpreted by markets in order to make more detailed guesses about when an interest rate hike will be made – should the report suggest that inflation is set to accelerate therefore, we could see some Sterling strengthening. Equally however, if it looks like inflation is creeping back down, markets may continue to choose the Dollar over the Pound. European GDP figures on Friday might help ascertain whether the Euro will continue to be rocked should they come in lower.

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 is the best time in over a year to make a Sterling transfer into US Dollars following a significant drop in the dollar matched by a surge in Sterling on the back of staggeringly high inflation figures released in the UK this morning. If you have a Sterling to Dollar transfer in the future, it is a good time to check in with your broker now and find out about fixing rates of exchange with a forward contract to make sure that you don’t miss out. This morning’s inflation figure up at 4.4 percent will add renewed pressure to the Bank of England to raise interest rates.

Pound Sterling – UK Markets

Sterling has seen a surge overnight and this morning as CPI data revealed that inflation had grown to a staggering high of 4.4 percent. The Pound in particular is at its strongest levels against the Dollar since early 2010.

The inflation figure at 4.4 percent is over twice the Bank of England target of 2 percent and also higher than the official forecast of 4.2 percent. It also demonstrates another move upwards from last month’s figure of 4 percent. The soaring figure will suggest to markets that an interest rate rise may be forced from the Bank of England in early summer and has helped flout thoughts that this would be pushed back later into 2011.

This morning’s retail price index also came in showing above forecast growth for February with monthly growth at 1 percent.

Apart from the budget tomorrow, the Bank of England minutes released at 9.30am will be crucial for Sterling. Last month, the minutes revealed that three members voted for a rate hike. Should another member have joined the vote for a rate rise this time around, we could see some more Sterling upwards momentum.

US Dollar – US Markets

The Dollar Index, which measures the Dollar against its other major currency counterparts, has fallen to a fifteen month low. The Euro has reached four and a half month highs on the US currency whilst Sterling has reached its highest levels since January 2010.

This broad downwards pressure on the Dollar has suggested to some analysts that the its safe-haven status has all but vanished of late. A slump in US existing home sales which are at the lowest level in 9 years and the fact that there are no immediate expectations for an interest rate rise in the US in comparison to Europe where a rise is expected as soon as next month, and the UK where a rise is expected in the summer are adding further pressure.

Later today sees a speech by Geithner, Secretary of the US Department of Treasury on how he observes the current US economy.

Euro – European Markets

The Euro has soared against the US Dollar as expectations rise that the European interest rate hike will come next month following comments from ECB board member Gertrude Tumpel-Gugerell and council member Yves Mersch that strong vigilance was necessary to keep down inflation. There have also been comments to suggest that economic uncertainty due to events in Japan, will not, as some have expected, push back when Europe might make a rate rise. ECB Governing Council member Guy Quaden is due to speak in Brussels today.

Tomorrow sees industrial new orders data from Europe in the morning followed by consumer confidence figures in the afternoon.

Other Currencies – Highlights

The Canadian Dollar surged against the US Dollar by the most in almost seven weeks as crude oil prices continue to rise as turmoil in North Africa and the Middle East continues. As well as the rising oil prices, the Canadian Dollar is also benefiting from the return to riskier currencies as the nuclear crisis in Japan is coming further under control.

The Pound has broadly gained since last week largely due to last week’s Bank of England inflation report on Wednesday. At the start of this week we touched the 1.18 levels against the Euro and have reached 1.60 against the US Dollar. With the amount of volatility that we have recently seen, it is worth considering booking a transfer or fixing a rate in advance for any GBP transfers into another currency.

Last week’s inflation report addressed the rising levels of inflation which have made it increasingly likely that the Bank of England will make an interest rate rise sooner than was thought six months ago. Interest rate rises nearly always boost a currency as we have just seen with the Australian Dollar which reached parity with the American Dollar for the first time in years following a decision to raise interest rates in Australia. The downside of increasing inflation is that it raises questions over the ability of the Bank of England policy members to keep inflation below the 2 percent target as this has not been achieved. From a currency point of view however, markets tend to invest in currencies where the inflation pattern is showing a growing economy and higher interest rates, so it looks as though Sterling could strengthen on the back of this area.

This Wednesday is shaping up to be the crucial day for the Pound with yet more insight into the Bank of England’s decision making when the policy minutes of the last meeting two weeks ago will be released at 10am. These have shown the ability to significantly move the markets over the last few months so it’s a good idea to speak to your broker and make sure you are watching what happens with the rates. If these further reinforce the fact that an interest rate rise is becoming increasingly likely they may push another rally – on the other hand if they significantly downplay the brighter GDP figures and other news they could bring along more uncertainty.

The Euro has had its fair share of good news over the past week but due to the debt problems of the weaker nations, particularly Ireland, making headlines, the single currency has failed to respond. Positively increasing GDP figures from Europe, Germany and France at the tail end of last week for example have not given the Euro the boost they might have if sovereign debt was not haunting the Euro. An EU finance meeting begins today in which Ireland’s debt problem will be discussed. Although Ireland are adamant they do not need help from Europe to manage their debt, it is believed that the EU may force help to ensure the situation does not spiral and begin to affect other EU nations. Should it be announced that the EU are going provide rescue funds to Ireland at any time over the coming weeks, some weakening of the Euro might be expected.

Now that the quantitative easing decision is done and dusted as far as markets are concerned, the US Dollar has had room to appreciate, particularly benefiting from Euro weakness. There have also been some surprisingly positive data releases such as retail sales and consumer sentiment. The Pound is still at some of the highest levels seen all year reaching above 1.60 against the US Dollar but there is a lot to play for this week with both the Bank of England minutes and US CPI inflation data on Wednesday.

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.

Like the nations MPs, currency rates for the pound remained under pressure this week, as the expenses scandal continues to haunt UK politicians. You know things are bad when you have to pay for your own gardening and the pound fails to crack 1.08 against the euro. Yet positive signs from the labour market may have revived some faith in the pound, and we may see the UK enter the recovery phase soon.

In the UK last week, the lowest inflation rate in 5 years put sterling under pressure, although Bank of England MPC member Charles Bean revived some confidence by talking about an end to quantitative easing. The pound received a boost late in the week as jobless claims rose by 21,000 which was less than markets were expecting and the unemployment rate held at 7.9%. This is largely due to a lower rate of redundancies and average earnings figures were unchanged from last year.

This news sent the pound to a 3-week high against the US dollar, rallying above the 1.60 resistance level to touch on 1.61. Economists are predicting the UK economy could be close to a turning point, however at present, the underlying trend in sterling remains bearish. This week brings government borrowing figures and the latest MPC minutes.

Exchange rates for the greenback are also on the back foot, after minutes from the MPC meeting showed that US interest rates are likely to remain low for some time. This sent the US dollar to a 14-month low against the euro and 15-month lows against the New Zealand and Canadian currencies. Near-zero interest rates are making the dollar an attractive proposition for carry trades at present. Consumer price index figures and jobless claims are expected to be positive for September, which could induce some volatility later in the week.

The euro has continued to benefit from a rise in risk appetite, reaching a 14-month high against the US dollar to trade just below 1.50 after the Fed indicated interest rates would remain low. German ZEW economic expectations came in slightly weaker than expected, surprising markets after positive manufacturing data earlier in the week. The German economy is expected to grow by 1.2% next year after shrinking 5% in 2009.

Elsewhere, emerging markets stocks have posted their longest rally in four years on the back of rising oil prices and improved figures from China. Japan voted to keep interest rates on hold and the Australian dollar remains buoyant, trading at its highest level in around 25 years against the pound. Australian interest rates are the highest of the G10 nations at present and strong demand from Asian markets is driving the economy forward.

While the picture remains glum in the UK, with high government debt and interest rates expected to stay low throughout 2010, jobless figures this week show that the pace of decline is moderating. At present the weak pound is supporting the UK export sector and the Bank of England may look to reign in quantitative easing levels in the first half of 2010.

Because currency exchange rates change every second, timing your trade to get the best exchange rate can be difficult. Currency Solutions can help you make the most of your currency transfer by providing expert market information and bank-beating exchange rates. Our personal currency brokers watch the markets on your behalf and help you get the best exchange rates for currency transfer. Visit us online at www.currencysolutions.com or phone 0207 740 0000 to see how much you can save.

Have a good week!

Nigel Hodges (Currency Solutions).