Euro / Pound sterling - EUR/GBP

Within the framework of the European Union, of which Great Britain is one of the most distinguished founding countries at an economic level, the history of the relation of the Euro and the Pound Sterling (and so the EUR/GPB) is rich and complex.

Since the Pound Sterling left the EMS (European Monetary System) in 1993, its rate knew more important variations against the Euro than the other Union member countries’ currencies(not members of the Euro area), in particular during the two first years (1999-2001) after the introduction of the Euro –  this one depreciated a lot against the Pound Sterling.

The history of EUR/GBP is the refusing one, the one of a large part of the British citizens attached to the Pound as the symbol of sovereignty, but also the British monetary and governmental authorities’. Since Great Britain has been outside the common European rules in terms of the state budgetary gap’s limitation and also outside the ERM II agreement (Exchange Rate Mechanism) that defined the precise range (15% but far less in reality) of the European currencies variation outside the Euro area against Euro.

The evolution of the EUR/GBP cross rate on the foreign exchange market from 2000 to 2007 gave reason, at a purely economic level, to the British government’s choice, as the Euro alternates decreases and stagnations against Pound Sterling and the British economy takes advantage of the currency force and stability.

For a long time, the most pertinent question regarding the EUR/GBP was the following: when will the Pound be at 2 Euros? But the EUR/GBP apprised by 25% since the end of 2007, reaching 0.7900 in September 2008, then the historical record of 0.9785 on December, 29th 2008, all in all nearly a 1 EUR = 1 GBP. The banking and financial crisis of autumn 2008, that particularly concerned the “City” and a lot a British banks (Royal Bank of Scotland, etc..) had gone around it.

The Pound Sterling fate is strongly linked to the banking sector risk perception, and the American reassuring signs (purchases of American’s toxic assets, etc.) so as the announcement made at the beginning of March 2009 by the British monetary authorities of a massive purchase of Treasury stocks for about £75 billions, led to a re-apprising of 7 to 10% of the Pound against Euro, the EUR/GBP cross reached 1.1000 in April 2009.