How Will The Euro Fare Against The British Pound?

Posted December 17, 2010

It is always interesting to see how the European single currency fares against other currencies in Europe – those currencies that elected not to become part of it. This is especially the case at the moment because the Euro is in some trouble. Owing to the troubles of some of the EU’s member countries, the single currency has been struggling to put in a good performance on the currency converter. If you have been planning a festive trip somewhere in Europe of late, you will no doubt have noticed how poor the exchange rate is.

 

But there is another European currency that has also had rough times recently. This is the British pound, and while you could say that it has gone through its roughest period and is coming out the other side, it seems to be taking its time to do so.

It’s a good time then to check the performance of these two currencies to see which one has managed to come out in front. As October finished the Euro was sitting at 0.8686 against the pound. The early signs were good in November though as the Euro managed to climb up to 0.8749 just a couple of days into the new month. Would this be the pattern that would see the currency through the month, or was there a lot more to come just yet?

As it turned out the Euro did dip slightly before that first week was out, falling back a little to 0.8679. This wasn’t too bad though, as it was still only slightly lower than it had been to start the month on. The question was whether it would go higher or lower from this point onwards.

Fast forward to the 11th of the month now and we shall get our answer. By this time the Euro had clearly become the underdog as the pound pushed it back to 0.8491. Could it carry on pushing and force the Euro to accept an even lower exchange rate?

The week finished on 0.8507 but after that point the rest of the month was really quite a head to head between the two. We’re not sure whether the pound was flagging or the Euro was simply picking up a bit. Not one of the currencies seemed to be taking the upper hand; it was more a question of them both being weaker and figuring out which one was the weakest of the two. It still seemed as if the Euro was on the back foot though, and as the remaining few days of the month played out, more evidence for this line of thinking came together.

The final exchange rate for the month was 0.8376 as the Euro failed to make anything remotely like a comeback. It was a shame to see the single currency struggling so much, but the British pound was probably glad that it was. It remains to be seen whether the Euro can pick up on its performance towards the end of the year.