How low will the Euro go?
Just a few months ago many in the European Union were feeling very pleased with themselves as sterling continued to suffer in the currency markets and indeed the euro hit parity with the UK currency. However, while the UK economy is by no means out of the woods yet it seems that a few months in the worldwide currency and investment markets is a long time!
After hogging the headlines for many months, the UK economy has now been overtaken by the Eurozone which is on the verge of a double dip recession. Not only are their major economic issues in Greece but also potential difficulties in Portugal and Spain as well as problems with the German economy, which showed zero growth in the final quarter of 2009. If this trend continues in Germany then this will impact upon the Eurozone as a whole and we could see economic activity begin to waver and consumer and business confidence suffer.
If these nightmare scenarios come together then there will be further pressure on the euro which will be tested to the full for the first time in its very brief history. However, there is no doubt that in the medium to longer term the euro will become a major force in investment and currency markets around the world and this ongoing weakness is likely to be fairly short lived.
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