British Pound - Euro, Exchange

[Khandro]

Just looking at the graph of the current exchange rates ;
http://www.x-rates.com/graph/?from=EUR&;to=GBP&amount=1
There seemed to be a huge momentary drop and then an instant bounce back on Friday. I haven't seen anything quite like that before, can anyone explain what that was about, please?

[KARL]

Changes in exchange rates are predominantly the result of market sentiment, the assessment/feelings/mood among dealers, buyers and sellers, sometimes causing very short blips. Fifty years ago the Pound was worth around USD 2.60, now it is worth half that. In 2000 the Pound was worth EUR 2.37, now it is worth half that. It seems the world reckons the UK economy has performed half as well as others and that compared to other currencies the Pound is uninteresting.

Not to worry, we are told that the new dawn heralds unimagined recovery and very likely boundless prosperity - maybe to the pre-1975 levels when the UK was "the sick man of Europe". Ah, I remember it well and how good those days were (not).

[Garaman]

//In 2000 the Pound was worth EUR 2.37... //

What?

[Gromit]

it does look odd. If you play with the graph and look at just that day, you can see two or three dips then rebounds then graph flatlines into the next day as if nothing was happening.

[Orderlimit]

High impact news usually cause big spikes but this was after trading hours. I've had a look at a couple of other data providers and they all show the low price for Friday as approx 0.8385.

However, the European Banking Authority was due to start releasing its 2016 EU-wide stress test results after 9/10pm Friday night so maybe that rocked the markets.

[fiction-factory]

The drop shown was around 2.5% which perhaps isn't huge but it certainly looks odd. Can you see from any of the charts what time of day it was?

[fiction-factory]

Crossed posts. Thanks- it was after hours.

[Orderlimit]

Another big mover is at 1.30pm (Gmt) on the first Friday of every month when the Usa releases its non-farm employment change results.

[Khandro]

I wonder if anyone made a fast killing during those hours?
KARL; When I was a boy in the 50s the slang term for 5 shillings (one quarter of a pound) was 'a dollar', half of it, 'Two and six' or 'half a crown' was 'half a dollar', all very confusing for the people of today, but it indicates that there were around 4 US dollars to the pound after WW11.

[CrapAtCryptics]

if you go the BBC currency pages and select the whole year option the overall trend for many currencies is a downward trend - we are no different against the dollar and euro. The recent bounces are currency speculators depressing the market and then making a profit on the recovery.

[Prudie]

For Karl the best the pound has ever been since the introduction of the euro is 1.5220 or just short of 66p. Your 2.37 must be a typo.

[TheChair]

In May 2000 the Pound hit 1.745346775 to the Euro, according to this:
https://taxfreegold.co.uk/2000forexrates.html

[Prudie]

Different websites seem to give different answers.None come even close to Karl's figure however
http://www.purefx.co.uk/help-centre/daily-market-commentary/view/what-is-the-strongest-the-pound-has-ever-been-against-the-euro

[Khandro]

This chart says 1.71444 in 2000. Put your cursor on any point on the line and it gives the value and date.
http://www.pounds2euro.com/Charts

[Garaman]

I think it is better anyway to look at yearly averages when considering trends, rather than the odd peak or trough:

1999 1.518977
2000 1.641533
2001 1.608037
2002 1.592554
2003 1.443022
2004 1.474036
2005 1.461216
2006 1.466612
2007 1.461786
2008 1.259467
2009 1.122460
2010 1.165737
2011 1.152580
2012 1.233263
2013 1.177964
2014 1.240494
2015 1.377982
2016 1.271154

The euro did better than the pound at the height of the financial crisis which is quite amazing given that it was the new kid on the block and given the problems around Europe. I expect the pound to pick up a bit though.

[KARL]

I owe an apology: The figure I quoted was derived from a quick google where 2000 pounds (not the year) are (today) worth 2369 !! Too much haste and not enough brain engaged. Nevertheless, I knew that with the odd blip the Pound has steadily fallen behind against the Euro throughout its 15-16 years of existence.

Khandro, I remember that when I first took interest in the GBP/USD rate it had not long since dropped from above three to the Pound.

[Garaman]

I wouldn’t say that the pound as fallen behind the euro, rather that the euro has gained more credibility since its introduction. If you consider the pound/dollar or pound/yen during the same period there hasn’t been anything like the same decline. The initial value of the euro reflected the doubt some had in the currency, and so it was always likely that value would increase if it survived. I am a fan of the pound, partly through nostalgia, but I have to admit that the euro has done really well so far to survive some very turbulent times. If the euro does continue to survive and the situation should improve in some European countries, it could become a very strong currency indeed. Big ifs perhaps, but our European holidays could be costing us a lot more. There is always an upside though and that situation would suit our exporters.

[Khandro]

Another spurt, recovering well.

[Khandro]

Oops, forgot the link;
http://www.x-rates.com/graph/?from=EUR&;to=GBP&amount=1

[jim360]

I think you are reading the graph the wrong way round -- yesterday the pound drpped about 1.5% or more against the Euro, which is represented in that graph as the value of the Euro growing by a cent yesterday. Pound currently at around 1.18, although it looks like it's stabilised mostly after yesterday's fall.

[Orderlimit]

That high momentum move in the Eur/Gbp was due to heavy selling of the £ Khandro just as the Bank of England cut the official bank rate yesterday.