The peak for sterling during 2009 was the €1.19 it achieved in late June. Prior to that the last time it saw €1.19 was during its precipitous tumble almost to parity with the euro in November 2008. Now it is back up there, having a serious look at an upward break that could set it on its way to the mid 1.20’s. It is possible? Or will the gravity that has troubled it for nearly three years drag it back to earth once more?

On the face of it, this should be a no-brainer. Euroland is displaying all the worst traits of a currency union that applies a one-size-fits-all interest rate to a group of 16 different countries. Britain, meanwhile, seems to have accidentally elected a coalition government blessed with the ability and commitment to set right a national debt that will have doubled in the space of a handful of years. Sterling is sure to be the winner? Right?

There can be little doubt that, if the leaders of Euroland were to sit a GCSE in financial crisis management, there would not be many A-stars on the list of results. The Greek crisis had been looming for years, ever since the country fudged its accounts - ably assisted by Goldman Sachs - to cheat its way into membership in the first place. On at least three occasions this year the euro zone leaders put their heads together to come up with a suitable financial safety net to bail out Greece and hold the currency union together.

The first few efforts, each with a successively higher price tag, failed. The agreement reached at the beginning of May had to work; if not, Greece would have had to default on repayments in the middle of the month. The €750 billion stabilisation fund was massively bigger than its failed predecessors because the delay had added the names of Portugal and Spain to the danger list.

So far, the bailout has done its job. Greece has not gone bust because the EU and the International Monetary Fund have filled its funding gap at an affordable price. But there are rumours of two 'secret clauses' in the agreement. One apparently says that if the bailout is proved to be unconstitutional in any European court it will be scrapped.

The other says the nations providing the money do not have to do so at a loss; if they cannot raise cash at less than the interest rate charged to Greece (or Spain or Portugal) the programme grinds to a halt. Neither clause would be ridiculous but the possibility of their existence raises doubts about commitment, especially on the part of Germany which is up for €145 billion of the money.

Britain's new coalition government, meanwhile, had been making the right noises. Savings and waste-avoidance is supposed to save £6 billion this year and along with Mr camaron and Mr Clarke saying they will not atke their ministerial pensions Britain is on to make some gainsbut this is just the low-hanging fruit. The real meat of the strategy was revealed on the 22 June and the youngest chancellor did his job, his confident approach and the fact that he made it abundantly clear what was in store for Britain have helped investors overcome their fear for the pound.

In the meantime sterling has gained good ground against a weak euro to break the €1.22 benchmark. Thankfully Britains AAA credit rating was not reviewed and it has managed to maintain its 3A rating and this all helps with the market view of the pound.

So in the UK mixed views as always with budgets that have deep impacts upon what Brits take home, the good news of course is that Brits do not have to pay anymore for their booze so with less in their pockets they can still afford to drown their sorrows..

Will your UK house increase in value?

As normal this will depend what postcode you have in the UK but there is a general expectation to see a continuing increase in mortgage applications and providing lenders do their job we could start to see an increase in demand for property. Lets hope the lenders realise what a positive impact they can have upon the Brits. Stimulating the market in the UK can always have a positive impact for us here in Spain as Brits thankfully are still in love with the thought of lying in the sun and escaping the pressures of home. Maybe we will even start to see an increase in the Americans buying here as their market continues its tumple.

With all this to consider and how our team did in the world cup its not surprising that nothing sounds or looks straight forward.

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