Following my report on Sterling’s dire position seven days ago, the past week has seen some improvements in the position of the Pound – these should be treated as very precarious however, with the upwards movement against the Euro in particular being something of a red herring.

This is because Sterling’s 1.64 percent rally against the Euro over the past week came predominantly on Friday. It was widely reported that a single large order to exchange Billions worth of Euros into Sterling (relating to the UK’s annual rebate from the European Union agricultural subsidies) took place causing the sudden upwards jump. The bigger picture is that the Euro is likely to find more support over the coming week as Euro zone nations approve an increase in the region’s bail-out funds.

On top of this, this week sees monetary policy decisions coming from both the UK and Europe on Thursday. Whilst interest rates are more than likely to be maintained by both Central Banks, the speculation that the Bank of England will introduce more economic stimulus in the form of Quantitative Easing either this month or next month is likely to put downwards pressure on the Pound in advance of Thursday’s announcement. Most economists are predicting that the move is more likely to come in November, but nervousness is likely to set in before the Bank of England’s announcement later this week, with investors shunning the Pound for other currencies.

The Pound had an up and down week against the US Dollar, climbing overall by 0.84 percent. This means that we start the week at a rate of 1.558. Overall however, Sterling is still heading for its worst monthly performance against the Dollar in a year so this remains a good time to move Dollars back into Sterling or fix the rate for doing so.

For any UK based investors interested in property in New Zealand it’s not all bad news on the Sterling front – the New Zealand Dollar fell last week as after the nation’s sovereign rating was downgraded by credit ratings agency Fitch, due to the large amount of external debt that the nation has.

Key events next week include the European and UK monetary policy decisions on Thursday as well as more meetings regarding the debt and default issues in the Eurozone, including the Ecofin meeting, which could help push the Euro higher if more consensus is announced for supportive measures.

Next week will also reveal more about the state of the economy in the UK with a stream of economic releases which may well have an impact on the Pound – in  particular PMI data Monday to Wednesday in the areas of manufacturing, construction and services typically influence the Pound, especially when coming in lower or higher than forecast.

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.