One of the major currency pairs traded in the foreign exchange market today is the pound against euro This is because both currencies’ have seemingly low volatility and stability. In this article we will discuss the factors influencing the prices of these two currencies.
The Euro
The euro is the official currency of one of the largest financial centers in the world, the European Union However only 19 of the 28 members have euro as their official currency. These 19 countries are referred to as the eurozone. Member countries include Germany, Spain, France, Italy and Ireland.
The euro first came to be in 1995 and was introduced into the financial markets in 1999. Today, the euro is the second largest reserve currency traded in global markets. It is second only to the United States dollar.
The Pound
The pound (also known as pound sterling or simply Sterling) is the official currency of the United Kingdom and other territories affiliated with it. Out of the most-traded currencies, the pound comes out fourth. Right behind the U.S. dollar, euro and the Japanese yen. It is also the most-held reserve currency in the whole world.
Factors That Affect Prices
Much like the majority of the currency pairs in the forex market, the pound against euro pair can be affected by economic data and other external factors so it would be best for traders to constantly check financial news from the UK and the EU. Major geo-political and macro-economic developments, such as Brexit, play a key role in determining the performances of the pound against euro pair. Other economic data to take into account comprise inflation rates, GDP, monetary policies.
To conclude, it is highly advisable to keep informed of fundamental market trends that characterize global markets at any given moment before deciding whether it will be worthwhile investing in the pound against euro
