The EUR/GBP currency pair is one of the most traded in the world, and the most traded minor pair on Forex. Due to tight financial and business relations the UK has with the Eurozone, the pair's rate is relatively stable compared to most other currency pairs.
The euro is the official currency of most member states of the European Union. The eurozone, as the group of European states using the euro is known, includes approximately 350 million people and has a diversified and complex economy. The euro is popular with Forex traders. It is the second-most traded currency in the world after the U.S. dollar. Any major crisis in one or several member states of the European Union will affect the rate of the euro. When conducting a fundamental analysis of the currency, the economic indicators of Germany, France, Italy and Spain should be considered first as having the most weight in the eurozone economy.
The pound sterling is the official currency of the United Kingdom, its Crown Dependencies and some of its Overseas Territories. The service industries employ the most of UK workers, an approximate of 85%, while the manufacturing and construction industries employ an approximate of 13% of workers combined. The UK economy depends on the service industries such as finance and business, retail, food and beverage, tourism and entertainment. Some of the service industries, such as finance and business, suffer the most from financial crises, others, such as the catering industry, are hit by severe epidemiological situations. One has to carefully assess the fundamental factors impacting the UK economy to analyze the rate of the pound sterling.
Factors affecting the EUR/GBP rate include general economic indicators, such as information on employment, inflation data, retail sales, industrial production, trade balance and the release of GDP data, as well as the central bank decisions regarding the interest rates in the Eurozone and the United Kingdom. Political events, natural disasters and various government policies can impact the EUR/GBP exchange rate significantly.
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