Monday, 16 April 2012

Pound down 31%

UPDATE: pound now buys 1.2241 euros...

It's only three years since the pound sank to near parity with the euro. In other words, a pound and a euro were worth virtually the same amount.

In the wholesale market you could buy just 1.02 euros with each pound at the end of 2008.

So tourists heading for the Eurozone this week will feel a lot more comfortable about the current exchange rate of 1.2155 euros to the pound (update - now 1.2241) - up 19% from the depths of the financial crisis.

(You get a few cents less than that, of course, once money-changing charges are taken off.)

It's worth putting these numbers in a bit of historical context, though, because travellers face a much lower exchange rate than a decade ago - and businesses are still benefiting from a sizeable devaluation in comparison to their Eurozone competitors.

The euro was born as a notional currency in 1999. The pound bought 1.7510 euros at its peak in May, 2000.

Euro notes and coins were launched on New Year's Day in 2002. Even during during that year the pound reached 1.6404.

So sterling is still 26% lower than in 2002 and 31% down on the millennium year, 2000.

Between January 2007 and December 2008, the pound fell by 32%.

According to the ECB (European Central Bank), the average value of the the pound during this period has been 1.4084, substantially higher than the current rate.


  1. You also need to take inflation into account. The IMF does an inflation-adjusted exchange rate, IIRC, or you could simply compare CPI inflation over that period. I think the UK's will be higher.