Rather than burrowing in to all of the minutiae of economic theory and opinion on how the current state of both the UK and the European economies are playing out and will continue to play out for these major global currencies over the course of the year to come, we thought we'd outline our observations as to the seasonal, anecdotal changes that animate this currency pair.

One of the overriding concerns of businesses and individuals holding sterling and needing to pay someone in euros, or earning in euros and wanting to realise those earnings back in sterling, is the question of when to exchange. We will not be suggesting any sort of dependable or infallible approach to this per se. For one thing we can't, but also because the markets and the environment for the exchange of one currency in to another is constantly and ever changing and therefore cannot and should not be viewed in isolation.

Having said that, in our experience, there are certain times of the year when one currency might be more in demand than others and there are certain signals to the market which tend to imply certain outcomes in terms of a currency's movement up or down.

There are times of the month and even times of the week where, anecdotally, if the rate is going to move in one direction or the other it is likely to be on those days, during those weeks or over the course of those periods.

None of our discussion means to suggest that we would bet one way or the other on a rate moving in one direction or another, but, it is perfectly reasonable to say that certain information released to the market usually and could quite possibly induce certain market participants to conclude certain future outcomes or characteristics in behaviour and these are what we will be looking at, both the potential and usual outcomes and characteristics and converse effects of expectations failing to be met.

Every year we hear the phrase 'Europe goes on holiday'. This is typically during the month of August.

Whether it is Parisian bankers relaxing in the Dordogne, or German financiers sunning themselves on the Western Cape, the four weeks from the end of July tends to be when production halts, industrial activity lessens and the markets become more subdued.

Of course one cannot account for random acts or events and, when the markets are away, one might very well see far sharper shocks, climbs and falls, should events prompt those who are focused to react quickly and at scale at the expense of their absentee counter-parties.

We normally see an increase in offers on property in the final quarter of the year.

Those who have holidayed in France may return to the UK and decide they want to take the plunge and realise their dream of owning a slice of Riviera life.

Alpine resorts do well in the lead up to the firm summer months probably because those passionate about owning a little chalet or apartment in a ski resort have visited during the crispness of Spring.

The 12 weeks lead time between the signing of a 'compromis de vente' and the 'acte de vent' as part of the buying process in. France ties in precisely with the advent of fourth quarter in the UK; so, we can identify how rate volatility in either direction may affect those buying and selling on the continent.

Almost like clock work and for as long as any of our team can recall, sterling softens during the summer months.

One theory is that fund managers going away on holiday would rather maintain positions in currencies other than GBP. It is not that they dislike GBP intrinsically, but, rather that USD denominated assets are more stable and more liquid and they can rely on the fact that the state of their portfolio is less likely to be remarkably different when they comes back from holls.

On the flip side, once we enter the fourth quarter of the year many businesses are gearing up to their most active trading time...the festive holidays.

Depending on the weather over the summer months, retailers literally take stock. They will have placed tentative orders earlier in the year for delivery of their Christmas stock. Maybe they visited a trade show on the continent or further afield.

October is a very active month for those buying and completing on property as well as for retailers looking to position themselves and their wears favourably for the trundle towards year end.

What we are saying here is not particularly revelatory. Take the fact that the Spring is very much the busiest time for estate agents. Given a run of the mill conveyancing matter takes a matter of months and the fact that mortgage applications/decisions are not instant, it is perfectly obvious that completions take place over the summer, hence there is less activity as we enter autumn.

So, sterling seems to become more animated as we approach the end of the year.

We put this down to increased activity at a retail and consumer level.

The bouyancy that tends to animate sterling after the New Year holidays can be tied more precisely to an increase in service activity, one hopes.

Many companies have their year end as the first calendar quarter turns in to the second.

Tax returns, insurance policies, reinsurance and a reflection on and digestion of sales over the previous frantic quarter, mean that although many business may be quieter in terms of sales, their support services are beavering away moving money, reconciling balances and accounting for 'x' or 'y'.

So, the New Year tends to see the pound strengthen when data is positive. You can rightly conclude that disappointing or underwhelming information has the opposite effect, notionally.

Interestingly, that strengthening of the pound does not actually, or as far as we tend to see, translate in to businesses buying currency at a better price for the year ahead.

It is a dicotomy. The better value rate of exchange comes at a time when businesses are either reiling from poor performance (and should therefore be looking to make back any loss of margin) or celebrating beating expectations (and should be committing to a fixed currency spend for the seasons ahead).

Not enough businesses - who can - make use of the tools available to them which can help protect profit margin.

We think this is in fact because, noticing the rate has improved and bouyed by the optimisim that is palpable at the beginning of any new year, they infer this positivity will translate in to the rate for a prolonged period. Basically, many businesses think the rate will just continue to get better.

We are delighted when a corporate client sets their calculative break-even currency rate at the beginning of the year, however, if that is not matched by the use of a product which hedges off exposure to any subsequent (and largely inevitable) drop in the rate, setting your currency rate is meaningless.

One thing we advise is that businesses incorporate a healthy buffer in to their rate calculations.

Here is an example of what we mean:

A business selling Christmas decorations has, by January, a healthy bank balance.

The rate of exchange is up and sterling is in their favour.

They know what stock is their best seller and, at this point in the year, they may very well already know what lines they want to restock for next year.

This business does not know that they can buy all the currency they will need to purchase this stock now, but not have to pay for it until the supplier invoices.

By purchasing the currency, but not necessarily the stock, they have fixed their currency margin for the year head.

Yes, it could well be the case that the foreign currency cost of that stock goes up or down over the course of the year depending on the whim (we suppose) of the manufacturer or supplier; but, if it does not, then this business, having fixed their rate of exchange, has increased their margin by the extent to which the rate of exchange is higher than when they bought the stock last year.

Too many businesses get caught out by the mere fact that a rate which goes up quickly can go down just as quickly.

These businesses are not currency speculators.

We are a currency broker and we would never be drawn on speculating on the rate.

So, why do these companies not fix, cement, crystalise and lock their rate when they can, when they have the cash in the bank and when they can see the rate is better?

The simple answer is, in our view, they are using their bank and simply do not realise the simple contracts and tools available to them from suppliers like Prime Cap.

So, we have meandered through a years' worth of peaks and troughs.

Now we come to concerns facing individuals who do not have the luxury of time.

Someone needs to pay their tax by the end of January. They are presented with the sterling figure they owe only a matter of weeks before the deadline.

If they live in the UK but have capital outside the UK it is not uncommon that they might want to pay their UK tax bill with their foreign currency savings.

In fact, they might be paid in a foreign currency as is the case for a lot of the lawyers we have as personal clients.

A client approaches Prime Cap on 10th of January and knows they need to have executed and settled a transaction by 31st.

The first thing we do, and without even a sniff of vitriol, is suggest that the client consider their tax position as early in the year a possible, especially if they have foreseeable liabilities. The release of their P60 in May is the ideal time to consider preparing for a payment.

Remember, in January the pound tends to be higher(ish). By leaving their exchange until January our client who wants to pay their sterling tax bill using US dollars has picked perhaps the worst time of year for rate competition.

'If I wait until....Thursday....will the rate be better?'

The balanced and no-nonsense currency broker, sympathetic though they may be, replies 'there is simply no way of knowing'.

The foolish and inexperienced recent graduate who sits behind the dealing desk at a 'factory firm' tries to spin some convoluted narrative about how 'may be, yes, but' which is of no actual use to the client.

The call centre operative at the client's bank just repeats the rate they will offer.

The experienced broker who possesses the linguistic dexterity to simultaneously reassure their client that they've not quite shot themselves in the foot by delaying their payment will identify to the client the fact that at this time of year the trend tends to be a bit more GBP positive.

Advising the client that waiting even a moment means the current rate might no longer be available, for better or worse, is the primary function of a broker in this instance.

Any waiting is nothing more than speculation, plus, such is the relationship between sterling and it's major currency peers that, were nothing of any measurable force to happen to the markets, any decrease in the value of the pound (which would be in their favour) might only equate to a few pounds difference in terms of costs, so, why would they risk paying more for a potential gain tantamount to the cost of a sandwich?

When it comes to something like paying tax and getting a currency exchange done in time for the tax deadline, as with a business, considering your options well in advance of the deadline is a winning strategy.

It gives you choice and removes potential stresses.

Also, as we mentioned before, there are times of they year when the pound does soften. So, why not begin to think about how much you need to convert, provided you have it in the bank already, at a time when the rate will be more favourable to you?

Broadly speaking, at the end of the month and at the end of the quarter some fund managers - in layman's terms a 'fund manager' is the person who heads the team that decides what assets and instruments collective pots of money are invested in. Quite literally he manages a fund of money - will look to off load or get out of positions, trades and plays that have not performed as expected or are now in conflict with the wider investment policies and strategies because underlying aspects of the investment or the security have changed.

Fund managers and people who manage other peoples investments and savings have to report on the effectiveness of their approaches.

They do this periodically. It is not unreasonable for a fund manager to off load poorer performing choices prior to such reporting dates.

If enough funds managers offload or get out of positions at the same time and in the same currency, this can have an effect on the rate at which that currency is exchanged.

This is where we come to aspects of supply and demand.

If i am a pension fund and i feel that my investment choices are more weighted in one direction than the other, i have a reporting period coming up and i want to ditch this poor performing investment in favour of one more benign or stable, it may be the case that i am selling a lot of stocks denominated in sterling (let's say).

My selling out of these positions naturally attracts the attention of others in my sphere of operation. For one thing they are seeing a lot of shares in something come back to the market because i have sold them.

This could well prompt my competitors to take note who might, quite reasonably, do the same. As more and more of these shares come to the market their price drops because fewer institutions want to hold them on the back of my, and now my peers, indifference to them. The currency in which these stocks are traded is also coming back to the market and, in theory, it's price drops too because there is an oversupply.

Anyway, what many commentators do not talk about is the effect of this type of appetite and what it does to the rate of exchange.

They reason it is not often talked about if actually because it does prompt huge shifts in the value of a currency. It happens often, but other factors may mitigate the effects of these sorts of sell offs on the broader exchange rate.

Consider though the implications of a large proportion of the world wide traders in certain assets deciding they do not want to hold them any more.

Consider that these assets have under-performed for a while and that a number of fund managers want to make their reports and positions look more stable and less vulnerable to further losses in these types of investments.

In this case you get something called 'window dressing'. Funds managers who work for financial institutions - institutions that might be a bank - want to make their choices look as sound a possible and as considered. They do not want bad choices pulling down their averages and they want to demonstrate to their stakes holders that they're able to identify poor performing positions and not waste more money on them.

These reporting periods or seasons tend to happen around the same sort of time for year for each sector.

Now, we are not going to say that window dressing necessarily moves sterling adversely more so than any other currency, but it does rather depend on the underlying fundamentals of the markets and economies in which institutions operate.

What we can say is that reporting season(s) not only serves as a barometer of optimism or not, but it is also a likely period of currency volatility. For one thing, the performance of big banks and institutions in economic news in its own right and can very well dampen or buoy confidence in certain markets.

The lead up to reporting season can we see volatility on the currency markets. That volatility is both a concern and an opportunity for businesses and individuals considering the exchange of currency and it is the work of a good forex broker to be at the coal face and feeding back information to their clients about changes in the value of the currency they hold and the currencies they may be looking to acquire.

Your bank will not call you to tell you that the rate has gained a further half a cent because RBS will be sold at a knock down price and the UK public will have to weather their losses.

A broker should.

An online platform, TransferWise, for instance, is not going to tell you that unemployment figures in the United States may, if positive, see the pound lose value because appetite for US denominated industrial stocks increases.

Our broad view is that if one can avoid making a foreign exchange conversion one should. If for no other reason that an faction, minute or not, of the currency you buy goes to the entity performing the exchange (whether than is Prime Cap or a bank).

If you are going to perform an exchange then we think you should do so using the tools, skills and insight of a company that has actually thought about the issue that face you in the context of the conversion.

We also think you should be in a position to freely and openly consider the array of contracts and tools that can lessen the effects of adverse subsequent movements in rates of exchange and that can extend your access to rates that improve you position for the longer term.

Our brokers are available on 02031728193.

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