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 30/12/04

The British pound recovered its footing on Thursday as dealers took the view its fall to a 14-month low against the euro in the previous session had been overdone.
Sterling tumbled against both the euro and the dollar on Wednesday as news of a large drop in mortgage approvals raised fears of a sharp slowdown in Britain's housing market.
But data from the Nationwide building society showing house prices fell only 0.2 percent in December helped the pound claw back some of its losses.
"The Nationwide could have been a lot worse and sterling is now looking a bit oversold," said Adam Cole, senior currency strategist at RBC Capital Markets. "House price surveys are still pointing to a relatively soft landing for the UK property market."
Sterling was up 0.3 percent at $1.9200 early this morning, moving back towards 12-year highs set earlier this month above $1.95. The pound was also a touch firmer against the euro at 1.4103, having fallen beyond 1.4075 on Wednesday for the first time since October 2003.
The Nationwide data showed British house prices fell for a second time in three months in December, bringing the annual rate of increase down to its lowest level in nearly three years.
But the fall on the month was less than some analysts had forecast and eased fears the Bank of England may be rushed into lowering interest rates to stave off a house price collapse

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Inter-Bank
GBP/EUR – 1.4090
GBP/USD – 1.9180
USD/GBP - 1.9205