Euro / Pound
Written by Toby Fischer
In late August Mr Watkins had found a property in Europe for which he had a balance of 150,000 Euros to pay. At this time the Euro reached 1.4900 to the pound, the property would have cost him £100,671.14
When Mr Watkins came to make the final payment in late September, the Euro had dropped back to 1.45, the result of which was a final price of £103.448.28 - an additional cost of a staggering £2,777.14 in four weeks.
Much of this loss could have been prevented by securing the rate with a forward contract. This mechanism is especially useful when market conditions are currently advantageous, but the currency is not actually required until a date in the future.
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Updated 21/12/04
Sterling traded defensively against the euro and dollar on Tuesday as more evidence emerged that the downturn in Britain's property market was gathering pace.
A survey by the Royal Institution of Chartered Surveyors showed British house price falls accelerated last month, pushing the seasonally adjusted house price index to -48 in the three months to November, from -40.
The fall defied economists' expectations for a stabilisation in prices and the balance was at its lowest since December 1992, a time when the last British housing market bubble burst and trapped millions in negative equity.
"The RICs survey showed subdued conditions in the housing market and this could be weighing on sterling," said Steven Pearson, chief currency strategist at HBOS.
Sterling was down a third of a percent at $1.9370 in early European trade, moving further away from last week's 12-year high of $1.9550. The pound was also a touch lower against the euro at 1.4500
The RICS survey follows data from the British Bankers' Association on Monday showing the weakest mortgage lending in nearly three years. An acceleration in house price falls this autumn follows five interest rate hikes over the past year to 4.75 percent

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Inter-Bank
GBP/EUR – 1.4431
GBP/USD – 1.9365
USD/GBP - 1.9395