The euro nearly hit parity against the pound recently but the euro weakened sending it back up from €1.02 to around €1.13 to the pound twice now. What is driving this temporarily is the world currency trader view that the UK was in a worse position than Europe. Not so. There was a bit of a realization about this on 31 December as the euro began to weaken following news that all was not well in Euro land. The euro made it up to €1.13 to the pound but overextended itself and, following the government announcements of huge additional capital injections, guarantees and lifelines international currency traders changed their view again and decided that the UK was in a worse position instead. Not so. We're going to see the euro rate fall back to between €1.06 to the pound and parity. Over the next month or so it is pretty likely that the traders' consensus will change 180° again and we will see the euro weakened dramatically and I expect to see it up at €1.2 to the pound or even €1.3 to the pound later this year - the overall target is around €1.35 to the £ as per the chart below.

Irish and other euro land investors moving their cash over to the UK recently (or right now if they have not already done so) or so should do pretty well as they are not only buying at the best possible moment in the distressed property market but also probably the strongest moments of the euro. Once the euro weakens and the UK market begins to firm up, the combined effect for a euro buyer purchasing in the UK will mean that they are a long way from the best buying opportunity. The UK will come out of the credit crunch sooner and stronger than Europe. Europe has always been weak and the effect of the credit crunch will be to suppress its growth massively for years to come leaving the UK with its flexible currency to power ahead. Watch for some countries getting close to leaving, or actually leaving, the Euro! Those at greatest risk would specifically be Spain, Greece and even possibly Ireland if its credit rating gets downgraded - Italy and Portugal as outsiders. That would see the Euro at maybe €1.60 or greater to the £.