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.

Last week I reported Sterling’s recent movements - gaining on the Euro whilst dropping against the US Dollar. This movement has extended throughout the past week as the markets saw even more intensity – against the Dollar for example, Sterling tumbled by an astonishing 2.05 percent.

Sterling managed to keep climbing against the Euro to levels of 1.163, the strongest rates seen in over three months. This ascent gathered momentum from Thursday onwards when interest rate decisions were announced by both the Bank of England and the European Central Bank. Whilst both decisions were in line with expectations in terms of holding interest rates, Sterling found support from the fact that some economists had expected new quantitative easing measures to be announced by the Bank of England to help shore up the economy - this did not materialise as the economy was evidently believed to be robust enough for now which helped support the Pound.

Trichet’s comments following the interest rate decision in Europe on the same day did also not help the single currency as he identified ‘intensified downside risks’ to the economy with some predicting that European interest rates may have to be brought back down at some stage. The resignation of European Central Bank Executive Board Member Juergen Stark, reportedly over policy, also generated uncertainty and provoked more Sterling weakness.

Anyone interested in the Swiss Franc, will be astonished at some of the movement throughout last week. The currency plunged by 10 percent against the Euro as Swiss officials announced plans to intervene in order to artificially bring down the value of the currency and introduce regulations about how much it can grow against the Euro. This made the Swiss France unattractive to investors.

Sterling steadily fell against the US Dollar throughout the week to levels of 1.588. Confidence grew for the US economy as President Obama announced plans about a programme to stimulate jobs with an injection of 300 billion Dollars. There was also positive news concerning the US trade deficit which fell by 13.1 percent in July which was much better than expected.

The mixed picture of Sterling’s current movement, with the Pound growing against some currencies, whilst falling against others, reveals that the Pound itself has little internal strength at present. If you have Pounds to transfer therefore you should consider the current rates as very precarious. The strengthening position against the Euro is really under-pinned by weakness and problems in Europe. Although no quantitative easing was announced in this month’s UK monetary policy decisions, there is still a strong possibility that this could happen at some stage – and when it does we would expect Sterling to lose ground as the market is flooded with Pounds. It’s best as ever, to have target rates of exchange in mind, and make yourself protected against currency fluctuations. The second half of this week sees a wealth of data being released – from more UK retail data to CPI inflation data in the US. It may be another volatile 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.

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.