How the Pound performed in December
Sterling saw out 2025 on the front foot, particularly against the Euro, and in early January we have the best rates for buying Euros for nearly four months.
In fact, a typical €200,000 property purchase costs over £3,000 less now than as recently as November, due to the movement of the Pound against the Euro.
This movement is great news for buyers heading out to view in early 2026. And it has come despite the UK cutting interest rates in December, which usually weakens a currency’s position. In this case, as the Bank of England has said future interest rate cuts will be slower than previously assumed, sterling has actually benefited.
Against the US Dollar, it’s a similar story, with rates at their best since mid-September as we head into the new year. For currencies pegged to the Dollar, such as the UAE Dirham, the movement is tracked – so those of you buying further afield in Dubai, for example, have also seen your budget improve for the new year.
December 2025
GBP to EUR: +1.0%
GBP to USD: +1.6%
Looking back over the year
2025 will perhaps not be remembered fondly in terms of worldwide events, and the UK economy wasn’t a happy place either. With the autumn Budget bringing tax rises, and economic growth struggling to emerge, consumers and businesses have had a difficult time.
It’s not a great surprise that the Pound is in a weaker position against the Euro than a year ago, while Donald Trump’s volatile tariffs and economic policies have seen the US Dollar fall out of favour even more, meaning that the price of the US currency is now some 7% cheaper than a year ago.
2025 calendar year
GBP to EUR: -5.1%
GBP to USD: +7.7%
Coming up in 2026
As always, it’s very hard to predict future exchange rates – and often a better bet to plan sensibly and be realistic when budgeting for an overseas purchase.
With geopolitical events sadly escalating again, we could be in for a volatile time. And for the Pound, whether the UK economy can grow with its higher tax burden and nagging inflation will likely be one of the main factors determining sterling’s strength.
Having a personal contact at a specialist like A Place in the Sun Currency will enable you to stay on top of any developments. If you have a large transaction coming up, for a property purchase for example, you can also fix and guarantee your exchange rate at the time you put down a deposit, to keep your budget set in Pounds.
It can be a great way to lock in to a rate you’re happy with, without needing all your money available.
Happy house-hunting from the team at our very own currency transfer specialists, A Place in the Sun Currency.
