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In short, you can read a weathervane by looking at where the arrow is pointing. The Swallows weathervane below is pointing to the North-East, meaning that the wind is blowing FROM the North-East.
Many weathervanes these days are laser cut as one piece which means they are purely decorative; just because the sail turns does not mean it can tell you the direction of the wind. If you want to be able to read the weather as well, the weathervane sail must function. The weight at the front of the weathervane (the arrow) needs to be equal to the weight at the back of the weathervane (the laser cut design). When this bar is balanced correctly, the wind will catch the laser cut design because it has a much larger surface area than the arrow, and the weathervane will spin so that the arrow points into the wind. So a 'North wind' is a wind coming from the North; the weathervane's arrow will be pointing to the N - this is how a weathervane works.
In order to get the most accurate reading, the weathervane should be mounted to the highest point so that trees and other buildings will not interfere with wind direction. So, it's not just a case of knowing how to read a wind vane, but also that it needs to be manufactured correctly and fitted in the best location as well! All weathervanes by Black Fox Metalcraft are designed and tested to make sure they do actually read the wind direction.
In the UK the general prevailing wind is from the South-West bringing in warmer weather along the West coast due to the Gulf Stream. When your weathervane turns to show the wind coming in from the North or East this shows a colder spell of weather is coming in.