Why do currencies fluctuate?

Exchange rates can fluctuate wildly, and what’s good for one person or business isn’t necessarily good for another. The main currencies that concern people in UK and Ireland are Sterling, Euro and US Dollar. If you live in the UK and the Pound is weak against the Euro or the Dollar, that means your holidays are probably going to be more expensive, but it also means that it’s cheaper for people from those places to visit here, so they bring more money into the local economy.

Everyday Fluctuations

Currencies fluctuate every day, in fact by the minute, that’s a fact of life. This is caused mainly by the market-makers and dealers in places like the London Stock Exchange, Wall St. and all the other financial capitals, who are gambling every day on which currency is going to get stronger or weaker based on current events worldwide, and if they think one currency is going to get stronger, they buy and buy, forcing the price up, and when they think it’s going to go down, they sell, forcing the price down. So if interest rates go up in the UK, Sterling may well get stronger, as they can earn more interest in Sterling than another currency with lower rates. Or, as happened after the Brexit vote, confidence in Sterling went through the floor, which weakened it hugely against practically every other currency in the world.

2017-11-08T11:49:25+00:00 October 24th, 2017|