Currencies!! why are the Pound,dollar & euro fluctuating so much? is it a weak pound, or a strong euro etc?
whats the problem with the pound? is it because its weak, or is it the euro is strong? what are the elements that effect fluctuations in currencies?
a simple explanation would be good, but if that isnt possible then a good like would be great
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Tagged with: Currencies • dollar euro • effect • elements • explanation • fluctuations • isnt • pound
Filed under: Currencies
The main reason is this: lots of investors, and investment banks, use currencies to hedge their market positions.
It works like this: if I’m heavily invested in the US stock market, I want to have some money in another investment class that’s likely to go up if the US stock market goes down. So I might buy UK pounds sterling or Euros, so if the US stock market drops and the dollar is worth less, my pounds or Euros will be worth more.
The value of a currency rises and falls based on the belief that the nation’s central bank will be able to back up the value of the currency. So if the economy in the UK looks bleak, the pound tends to drop in value.
Hope this helps!
the euros is very strong due to their relatively healthy position, they have not lowered interests rates as much. The dollar may weaken now that the fed has reduced the rates, and the pound is now toilet paper, sad to say.
Its a weak Pound.
The pound is weakening even more than the dollar and euro and it’s very likely at this point that it will be replaced by the euro as this is seen as a long term trend, not a short term fluctuation.
It does look like the United Kingdom will adopt the Euro within 2 years,even rather reluctantly.