The stable graph of the Great Britain Pound’ exchange rate
The Pound Sterling has been extremely stable in the Foreign Exchange markets over the last few years. Considering the turmoil in markets world over due to mortgage defaults and credit crisis, this is significant. The monthly average movement of the Pound Sterling has not seen major deviations leading experts to believe that the Pound followed a slightly different process.
The exchange rate calculation between the Yen and the Pound is a fascinating aspect to study. Both are heavyweights in the Foreign Exchange markets yet do not have a lot of traders trading on them directly. As a result of this phenomenon, the Yen is valuated against the US Dollar and the US Dollar, against the pound. The resultant value is a multiplication of both the factors taken into count.
The exchange rate of the Pound versus the Yen is thus subject to movements in one external currency – The US Dollar. One bad day in the economy of the States that could see the valuation of the Dollar spiraling downwards, could affect the graphs of the Pound exchange rate. Let us take this example to understand the situation better.
September 15, 2008 – Pound is valued at 1.72 US Dollars and the Yen is valued at 0.0095 US Dollars. Multiply the fractional considerations of both these values and you would get a figure of 1 Great Britain Pound = 192 Yen. On September 16, if the Dollar value falls, the Yen would gain in its valuation as compared to the Dollar. At the same time, the Great Britain Pound would also be seen doing well. In this case, the Great Britain pound gains more, as it has a lot of momentum as a foreign currency.
Understanding the movements of the graphs of major currencies would require you to know the Foreign Exchange market in detail. Once you do that, you would have known how exchange rate of a particular currency fluctuates with respect to other currencies.