Sterling Euro exchange rates have held reasonably steady over the last month or so still trading close to the best time in 3 and a half years. This has presented clients some excellent opportunities for buying Euros. Over the last few days we have seen interest rates kept on hold for both the UK and the Eurozone and 6 German banks downgraded. During this period the exchange rates have been fairly volatile and despite the Eurozone’s most powerful economy having its banks downgraded the Euro actually strengthened against the Pound! This goes to show that sometimes there is no logic to the currency markets! Moody’s, the credit ratings agency that announced the downgrade of the 6 German banks, have stated they are delaying a decision on the rating of Deutsche Bank who are Germany’s largest bank and one of the largest financial institutions in the world. It will be interesting to see what announcement comes out in relation to this bank, any negative statements and confidence in the Euro could be hit while positive news could bring investors’ confidence back to Germany and Europe.

In the meantime the economic problems in Spain continue to make the headlines as rumours have been circulating the markets that Spain will need a bailout in a similar fashion to that of Greece. Spain’s finance minister however has claimed that the country will not need a hand-out from the International Monetary Fund (IMF) or the European Central Bank (ECB) however we heard these same claims from Greece before they were given a bailout! Despite these issues in Spain it is important to remember that the UK’s close trade links with the single currency economy means bad news for Europe can also mean bad news for the UK’s economy and therefore Sterling.

In the UK we have seen news that the housing market looks set to remain stagnant for at least the rest of the year. One of the country’s largest lenders, The Halifax, have stated that house prices have fallen marginally from the same time last year and do not look set to improve this year. With so many people in the UK having their money tied up in bricks and mortar and fall in house prices or stagnation in the market can have an adverse effect on the UK economy. So, if we are going to get out of the current recession we will need to see the housing market pick up.

It looks like the summer months will continue to be unpredictable so if you need to transfer money internationally make sure you speak to a specialist currency broker at Foreign Currency Direct plc so they can speak through your requirements and all the options available to you.