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The Pound (GBP) to Euro (EUR) exchange rate is one of the world's most traded currency pairings. Below are some facts about each currency and the history of the GBPEUR pair.
The British Pound, also known as Sterling, is the official currency of the UK, as well as a number of other small territories. One Pound (£) is subdivided into 100 pence. Its currency code is GBP and its currency symbol is £.
As the world's oldest continuously traded currency, the Pound is its fourth most traded, 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 interest rates for the UK economy.
The term Pound Sterling was initially derived from the Old English term for small star, which was present on the coins at the time. Forex traders in currency markets often use the term 'Cable' to denote the Pound to US Dollar exchange rate (GBP / USD).
As of 2020 the Euro is 21 years old, having been launched as a shared currency across the 19 members of the Eurozone. Initially, the Euro was called the ECU (European Currency Unit) and was in digital form only. One Euro (€) is subdivided into 100 cents. Its currency code is EUR and its currency symbol is €. Despite being only 21 years old, 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 popular global currency transaction. Euros are issued by the European Central Bank (ECB), which also sets interest rates across the Eurozone. Not all EU countries use the Euro, with exceptions such as Denmark and Sweden who price goods and services in their own currencies at a fixed exchange rate.
Since 1999 the Pound Euro exchange rate (GBP / EUR) has been one of the most traded currency pairings by volume. Initially, one EUR was worth 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 (Mar 2020) priced at around £0.86 (which equates to a GBP / EUR exchange rate of €1.16).
Is it apparent from looking at price charts of the exchange rate pairing that the Pound to Euro (GBP / EUR) exchange rate has followed a generally weakening trend over the years.
The value of the British Pound (GBP) is influenced primarily by Bank of England rates and UK political/economic news. With much of the UK economy relying on consumer spending and financial services (stock, bonds, insurance products), any factor which threatens these tends to have a detrimental effect on trading Sterling.
Brexit had a big impact on Pound exchange rates, with a large drop in trading being observed immediately after the referendum. The Pound has since made up most of these losses but remains weaker than it was pre-referendum.
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.
Other major factors that impact trading the Euro on FX markets are ECB rates, Eurozone productivity and EU political news - with Brexit having been a large factor in driving the GBP / EUR exchange rate. Germany is the Eurozone's main exporter, supplying markets around the world with engineered products, so any drop in demand from these markets can affect the Euro exchange rate.
The Pound to Euro (GBP / EUR) exchange rate today is being primarily driven by global political and risk factors. With most central banks - including the BoE and the ECB - opting to pursue very low 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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