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 23/12/04

The pound hit a 3-week low on the euro for a third day on Thursday after more dovish than expected minutes from the Bank of England the previous day led investors to revise down expectations for UK interest rate hikes.
The minutes from the Bank's early December rate meeting suggested some Monetary Policy Committee members felt the next rate move should be down and the pound fell around one percent against both the dollar and euro.
"Sterling remains under pressure from the interest rate outlook," said Ian Stannard, currency strategist at BNP Paribas.
"We expect the Bank of England to ease policy in April or May."
UK final gross domestic product for the third quarter is due at 0930 GMT and forecast to have expanded 0.4 percent to give an annualised rate of 3.1 percent, which would represent a slowdown from Q2's annualised rate of 3.6 percent.
Third quarter current account data is also due at the same time and is forecast to show a deficit of 6.5 billion pounds, which would mark a widening from the Q2 deficit of 6.43 billion.
The pound was quoted at 1.4270 at 0900 GMT, unchanged from late New York levels and above a 3-week low set earlier in the session at around 1.4280.

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Inter-Bank
GBP/EUR – 1.4250
GBP/USD – 1.9200
USD/GBP - 1.9225