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If the Euro goes down will the pound go with it as it seems that way right now?

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  • 1 decade ago
    Favorite Answer

    Generally, no.

    Currency exchange rates are a long term function of Inflation and (to a lesser extent) sovereign debt (Inflation is essentially rate at which the Governments print money ... and if eg. USA prints worthless paper faster than eg. UK, then $ falls against £ ...)

    Shorts term rates are a function of 'the Markets' confidence in a specific currency V's each other .. but here (of course) there are many 'knock on' effects .. thus, if The Market is worried about EU countries defaulting on their borrowings in Euro's thus leading to the inevitable break-up of the Euro, whilst this is 'bad' for the Euro, the 'knock on' effect will be that countries that hold Euro debt (eg UK) and/or have a large portion of their export trade in Euro's (eg UK again) will also be hit

    However just because Greece / Ireland / Portugal /Spain / Belgium & Italy default on their borrowings leading to a collapse in the value of the Euro V's everything else this would not bring down the £ (or $).

  • 1 decade ago

    It depends if the Euro and Pound are fixed currency exchange rates that fluctuate proportionately to each other.

    If not, they are part of a managed float system, that can be somewhat managed by adjusting currency exchange interest rates, or increasing or decreasing the supply of that money in the market.

  • ?
    Lv 4
    4 years ago

    that's been undermined by ability of the final of massive industries, steel, automobile, coal, even our service marketplace's have long gone out of the country, we basically have not something to commerce with, which supplies us a vulnerable place, the beforehand we settle for the euro the greater suitable, instead of this loopy concept we've have been given to maintain the pound continually, the outlook if we shop the pound is bleak, we choose the euro to shop us

  • Ed Fox
    Lv 7
    1 decade ago

    Just a minute, my crystal ball is a bit dusty.

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  • ?
    Lv 7
    1 decade ago

    Against what?

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