Other Free Encyclopedias » Online Encyclopedia » Encyclopedia - Featured Articles » Featured Articles: Embassy Suite Hotels - Embassy Suite Hotels offer guests a taste of the suite life to Mattress New York - Getting a Mattress in New York - Mattress Sizes and Features

Euro Pound Rate - How is the Euro Pound Rate used?

exchange currency rates country

The Euro Pound rate refers to the exchange rate between the Euro, the official currency of 16 member states of the European Union, and the British Pound Sterling, the official currency of the United Kingdom. The rate is important for foreign exchange (Forex) traders, for those interested in foreign business investment, and also for people traveling between Euro currency nations and the UK.

The sign for the British Pound is £, and the abbreviation used on the Forex market is GBP. The sign for the Euro is €, and the trading code is EUR.

Forex trading
The Euro Pound rate is what determines success or failure in foreign exchange trading between Euro and British Pound Sterling currencies.

The idea is for a trader in an EU country to invest in the British Pound with the hope that the Pound will go up in value in relation to the Euro. When the trader believes that this relative value has peaked, the Pounds are converted back into Euros resulting in a monetary gain. In the same sense, a British trader would invest in Euros. While this is probably the most common way of making money in Euro Pound trading, there are also more complex schemes.

Foreign investment
The exchange rate between the British pound and the Euro is also important for those considering making a foreign investment from one country to the other.

For example, if a British citizen is planning to invest in real estate in France, which is a Euro currency country, then the Euro Pound rate will be one of the considerations used in the timing of the real estate purchase. Ideally, the investor will purchase the real estate when the Pound is high against the Euro, since this will mean that the Pound will have greater purchasing power in France. At the same time, when the investor decides to cash in on the investment, the Pound will ideally be low in value relative to the Euro since the property will be sold in Euros and then converted to Pounds Sterling.

A corporation or large business, in either a Euro country or the UK, planning on opening a factory in the other region must also take the exchange rate into account. The salaries paid to employees, land or rental costs, and most other expenses will be paid in the currency of the country where the factory is located. Not only is the current Euro Pound rate important, but the investor must also try to project the exchange rate over the long term.

Exchange rates for tourists
For people planning to travel between Euro countries and the UK, the exchange rate determines how far their currency will go in the destination country.

If possible, the best time to travel will be when the currency in one’s home country is high relative to that in the destination country. If the exchange rates have been fluctuating wildly before you travel, then you should keep an eye out for the trends as you may find your budget coming up short while on your journey.

What determines the exchange rate
The relative value of currencies between two countries is linked with a large number of factors. Probably the most important of these considerations is the relative supply and demand. If there are too many Euros on the market, for example, this tends to depress the value of the Euro. At the same time, a shortage of Euros will drive the value upward.

Among the other important factors include the herd mentality of Forex traders, and the economic and political stability of the countries involved.

Forex traders have elaborate systems that provide them with “signals” that they use for deciding when to buy or sell a specific currency.

How to find Pound vs. Euro exchange rates
The most convenient way of finding these rates is to use online or mobile sources. All major online news websites provide real time foreign currency rates. You can also find the rates listed in the financial sections of large newspapers.

Remember that the Euro Pound rate, like all foreign currency exchange rates, can sometimes be highly volatile. Since rates can swing wildly, vigilance is required especially for Forex trading.

Euro Pro Shark Steam Cleaner - Why Every Homeowner Should Own A Euro Pro Shark Steam Cleaner [next] [back] Europe Vacation Deals - Locating the Best Europe Vacation Deals

User Comments

Your email address will be altered so spam harvesting bots can't read it easily.
Hide my email completely instead?

Cancel or