Let’s Talk… Are the Euro and British Pound in Crisis?

So in my life, I never thought that I would see the day when the Euro was below the US Dollar and the British Pound was almost at par with the Dollar. Here are some of my thoughts on why this is happening and when it may abate. 

First, both are suffering because of the energy crisis in Europe. A large portion of Europe depends on Russia for gas. Putin is playing his cards because this is one of the only cards he can play. 

Second, Europe/ Great Britain aren’t coming into this crisis from a position of strength. Their economies have experienced anemic growth since the 2008 financial crisis. 

Third, the USA is raising interest rates dramatically, therefore cash is flowing into the US Dollar as people around the world are rushing to take advantage of this. Yesterday (9/27/2022) you could buy US treasuries with a 1 year maturity yielding around 4 pct. You can see why an entity may sell euros or the British Pound to buy dollars to take advantage of the yield. 

In my opinion, this doesn’t end anytime soon because these trends run in cycles. However, at some point Europe will become a deal because it’s going to be really cheap. Anybody up for a trip to London anytime soon?

The opinions voiced in this material are for general information only and not intended to provide specific advice or recommendations for any individual.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.