Posted by Allison on 16 October 2009, 15:18
If you have been keeping an eye on the exchange rates between the Euro and the British pound lately, you will know that the pound has been having a tough time of things. The currency converters will show you that in actual fact there isn’t too much room between the two, with one pound equating to around 1.0714 Euros at the time of writing.
But according to the latest online news reports it could be about to change. Apparently there are many experts who believe the pound could start to improve against the Euro – and if it does you can be sure that many Britons looking to head over to Europe for a long weekend or holiday will take full advantage.
This news is particularly heartening when you realise that September was a poor month for the pound. This was revealed in an article on the Inside Ireland website.
Of course there is no telling when the situation will improve, but the key word in the news story as you read it is ‘undervalued’. This seems to be the general consensus of opinion regarding the currency, and there is every reason to suspect that the value will have to return sooner or later.
This may occur if positive news continues to trickle out of the City of London. As we have seen in the past, it is often the case that good news leads to more confidence in the currency markets. But it depends on which direction that good news is coming from.
So for example, let’s suppose the ECB – the European Central Bank – reveals some bad news about the European economy, as has happened in the recent past with the effects of the recession being in full force. If this occurs people will have less confidence in the Euro and its value will slide.
But if that news turns around and becomes more positive, the Euro would then rise again as more traders decided to invest in it to take advantage of that seam of positivity.
The same could and probably will happen with the British pound. There have been one or two more positive items of news coming out of the country of late, one of which has been the improvement of the UK housing market. And if that news continues to develop and traders start to look at the pound as something worth having again, then it could do rather better than it has done of late.
So it would seem as if the British pound is just waiting in the wings to make an appearance that it can be proud of. Perhaps we’ll have to wait a few more weeks yet to really notice a difference. But if these experts are right and the pound is currently not valued as highly as it should be, then the balance will be corrected sooner or later.
If you are interested in the currency markets do keep an eye on the currency exchange rates to see what happens and when. It may well be possible to identify the start of a comeback for the pound without even reading the news that will announce it.
But will it occur in 2009 or 2010? We’ll just have to wait and see.