I was in Iceland from mid-July through early-August, and the weather that I experienced was fairly average according to the locals. It rained on at least half of the days—not as a downpour, but in continuous waves of horizontal-blowing rain pellets that sometimes would drench one side of my body while the other side remained perfectly dry. Often there was a thick overcast of low-hanging clouds. There was almost always a wind, occasionally strong enough to knock me around for hours at a time. The weather was superb for one 6-day stretch—it was warm, sunny, and calm. Nighttime lows were usually in the mid-40’s, with a low of 37; daytime highs were usually in the mid-50’s with a high of about 75.
When the wind is blowing from the south (indicating a weather system from the Atlantic), expect warmer temperatures and more precipitation. This weather pattern is dominant in the summer. When the wind is blowing from the north (indicating a weather system from the Arctic), expect colder temperatures and drier air. This weather pattern is dominant in the winter.
Southeastern Iceland (Rekjavik)
Perpetual mist, showers, and downpours as Atlantic storms move overhead. Its proximity to the ocean and its low elevation make snow a rarity—it does not get “cold” here very often. The weather is similar to Seattle.
At sea level, the weather is similar to Reykjavik. But slightly inland are some of Iceland’s biggest mountains/volcanoes and highest sustained elevations. The Orographic lift of Atlantic storms causes this region to receive heavy amounts of precipitation, much of it as snow. There is a good reason that several of Iceland’s largest glaciers (including its biggest, Vetnajokull) are located just inland of the south coast.
Snaefellsnes Peninsula and Northwest Fjords
These isolated land masses get pummeled by both Atlantic and Arctic storms, which are going full blast when they make landfall. These areas also feature dramatic vertical relief—from sea level to as high as 4,500 feet in a very short distance—so the effects of the Orographic relief (e.g. namely wind and precip) is extreme.
Just north of and just below the largest glacier in Europe, Vetnajokull, this vast expanse of glacial debris is home to some of the most challenging conditions in the country. It is does not rain here often (Vetnajokull wrenches out most of the moisture from passing storms) but it is usually very windy because of the differentials in temperature and atmospheric pressure between the air mass above Vetnajokull and the air mass above the Highlands. Specifically, the cold air above the glacier rushes into the warmer air above the Highlands. Beware of sand storms in this area—make sure to have clear lenses for your sunglasses (ideally, glacier glasses) and clothing that will fully protect your skin.
I did not get up to this region, but I am told that during the summer it is usually warmer and sunnier than regions to the south. This probably has to do with Atlantic storms petering out as they move overland.