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Ok, so it looks as though I've got to wait a little longer than anticipated for this bout of sterling weakness to appear.  Actually it is here, but it is again masked by even greater weakness on the Euro front, so here we are at 1.2230 at the end of the week.

Woeful Euro

The reason for the gains were once again more to do with Euro weakness, as weak economic data from Greece increased concerns about euro zone 'PIGS's. The weak EU data has weakened the single currency meaning that despite poor UK data, the exchange rate gained.

Sterling Gains

Earlier this week sterling dipped badly against the Euro after the news from the Bank of England. In the past few days however Sterling has surged once more, hitting a six week high at over €1.22. This was despite  the gloomy Bank of England report on Wednesday, when it cut its forecast for UK growth and left the door open to more quantitative easing, at the same time predicting inflation would fall well below target in two years' time. 

The bad news from the Bank will in my view weigh heavily on the pound in the coming weeks, and the recent gains against the euro could be short lived as investor concerns move from the weak Euro to a potentially even weaker sterling.

And from here?

I am very tempted to buy some Euros this week, as I think sterling is riding its luck.  We could see a reasonable period, say two or three months, of sterling weakness to come, so if you think you might need some funding in that timeframe, I'd look carefully at the rates available now.  

I can recommend some very good exchange rate agencies if you're not sure who to use.

A bientot,   Rob

Please note that all these comments are my personal view and do not represent any firm advice by either France Financial or the Spectrum IFA Group.

Rob Hesketh and France Financial

Rob moved to France in 2003 after working for 30 years in International Banking in the City of London and Brussels.  He joined the Spectrum IFA Group in 2005 and became registered and authorised by the French fiscal authorities in mid 2006.  He is now a partner in Spectrum and looks after client relationships in the South West of France.

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