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The Euro (EUR) to Pound (GBP) exchange rate is one of the world's most high-volume currency pairings in terms of trade. Below are some facts about each and the history of the EURGBP pair.
As of 2020 the Euro (EUR) is 21 years old, having been launched as a shared currency across the 19 Eurozone member states in 1999 when notes and coins were created. Initially called the ECU, the Euro was only in digital form originally.
One Euro (€) is subdivided into 100 cents, while its ISO code is EUR and its currency symbol is €.
Even though it was only launched in 1999, the Euro is one of the world's most traded currencies, with only the US Dollar (USD) being traded more. In fact, the EUR / USD trade is the most common currency transaction globally. The European Central Bank (ECB) is the sole issuer of Euros, and it is also the institution which sets interest rates across the Eurozone.
Not all EU countries use the Euro, with exceptions such as Denmark and Sweden who retained their own money and price goods and services in local currencies at a fixed exchange rate.
The British Pound (GBP), also known as Sterling, is the official money of the United Kingdom, as well as a number of other small worldwide territories including Gibraltar, South Georgia and the British Antarctic Territory. One Pound (£) is subdivided into 100 pence (p). Its ISO code is GBP and the currency symbol is £.
The Pound is the world's oldest continuously traded currency, and it is its fourth most exchanged, with only the exchange of US Dollars (USD), Euros (EUR) and Japanese Yen (JPY) coming ahead. Sterling is issued by the Bank of England (BoE), which also sets the rate of interest for the UK economy.
The name Sterling was initially derived from the Old English term for ‘little star’, which was stamped onto money at the time. Currency traders in FX markets often use the term 'Cable' as shorthand for the exchange rate from Pound to US Dollar (GBP/USD), although there is no corresponding term for GBP/EUR trades.
Since 1999 the Euro Pound exchange rate (EUR / GBP) has been one of the most traded currency pairings by volume. Initially, one EUR would convert to around 0.7 GBP on the interbank market.
The Euro then hit an all-time high of £0.93 against the British Pound in Dec 2008, but has fallen back since and is currently priced at around £0.86 (which equates to a GBP / EUR exchange rate of €1.16).
Is it apparent from looking at price charts that the Euro to Pound (EUR / GBP) exchange rate has followed a generally strengthening trend over the years.
The main factors that impact Euro trade on FX markets are ECB rates, Eurozone productivity and EU political news - with Brexit having been a large factor in driving the EURGBP rate.
Germany is the Eurozone's main exporting country, supplying markets around the world with engineered products such as cars and machinery, so any drop in demand from these markets can convert into an impact on the Euro exchange rate. The price of Euro (EUR) exchange rates is often affected by the value of the US Dollar (USD), as the Euro is considered to be the world's second reserve currency.
The value of the British Pound (GBP) is influenced primarily by BoE rates and UK political and economic news. With much of the UK economy relying on consumer spending and financial services (stocks, bonds, insurance products), any factor which threatens these tends to have a detrimental effect on the value of Sterling.
As one might expect, Brexit had a big impact on GBP exchange rates, with a large trading drop being observed immediately after the UK referendum. Sterling has since made up most of these losses but remains weaker than it was pre-referendum.
The Euro to Pound (EUR / GBP) exchange rate today is primarily driven by various global risk factors, such as political news and trade war jitters. With most central banks - including the ECB and the BoE - pursuing very low (or even negative) lending rate policies, Forex traders are focusing on less technical factors. Instead, they are using risk and opportunity on global markets based on real-time economic data and emerging political trends as their trading signals.
The rate on this form is not available to individuals or business customers. This converter is based on the Interbank rate - this is used by banks to sell currency to each other and can indicate how the market is currently performing.
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