Currency exchange rates 101: The Eurozone crisis – what next for Sterling?

1st August 2012

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Currency exchange rates can rise and fall for a multitude of reasons.  In the very short term these fluctuations can be quite unpredictable, and based on trading patterns driven by a complex web of global events – to see these fluctuations in action you need only monitor the exchange rates at currenciesdirect.com.  However, when you look at exchange rates over a longer period of time the value of a currency like Sterling can be seen to be a reflection of the economic health of the nation.  Following the news that the economy contracted more than previously thought in the first quarter of 2012 – with revised official figures indicating a contraction of 0.3% rather than 0.2% – you might be forgiven for thinking that the increased depth of the double dip recession would result in a reduction in the value of the Sterling.  However, this has not been the case when it comes to the Euro and several other currencies.

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