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 10/01/05
Sterling fell a third of a cent against the dollar and slipped against the euro on Monday, after weaker-than-expected producer prices data.
Prices of goods leaving Britain's factories unexpectedly fell on the month in December and by the largest amount in more than three years, official data showed.
The Office of National Statistics said non-seasonally adjusted output prices fell 0.4 percent in December after a 0.1 percent gain in November and below expectations for a 0.1 percent gain.
Against the euro , the pound stood at 1.4286 compared with 1.4312 earlier in the session.
"The figures are softer than expected and are reducing hawkish rate expectations at the short end of the curve. The softness is related to the sharp decline in oil prices and sterling's rise against the dollar in December," said Lena Komileva, global economist at Prebon Marshall Yamame.
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Inter-Bank
GBP/EUR – 1.4290
GBP/USD – 1.8759