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79 British pence buys 1 euro or thereabouts today. Conversealy 1 buys approximately 1 euro 27. The rate of strength in the Euro has increased considerably over the past year or 2.

Euro has been gaining ground now that more expansion into the Euro zone areas has been made over the past few years. European entry of the Czech republic, Slovenia, Cyprus to name a few have all meant more euros being bought as the benefits of the Euro are being seen by holiday makers, investors, and by big bank borrowing.

Interest rates in the UK are higher by far than in the Euro zone. I remember years ago the European bankers and the EU interest rate setting committee were calling for a stronger economy and higher growth. Now that this momentum in the Euro through pure strength has been achieved there is a fear that this will result in a decline in British tourists to a certain extent. The UK itself, has problems like the US in the recent credit crisis and overall trade between the Pound vs Euro might result.

The collapse in the Northern Rock also would cause significant loss of confidence in the UK economy as the British Government have re-nationalised this failed bank with public money. Naturally and with this loss of confidence, and fears about employment and the property falling for a 5th month in a row will naturally cause investors buying euros, both in anticipation and as a consequence. The Euro with its much more diversified national structure adding new members is in a much stronger position.

With this loss of business and investor confidence in the UK based upon economic factors and as the UK already has high enough interest rates, compared to the Euro zone, this leaves the British interest rate committee with little scope for any upward movement in interest rates. The Euro on the other hand should economic growth exceed expectation there are possibly further chance of the Euro gaining more ground on the British pound.

For the /Euro situation its impact is welcome news for European investors, for example, it makes investing in Britain much affordable, and it has the opposite effect for British citizens seeking to invest in property abroad.

Learn more about this author, Costas Chryanthou.
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