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Euro 'trading at four-year low against sterling'

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Euro 'trading at four-year low against sterling'

The euro's performance on the financial markets is taking a hit as a result of continuing financial uncertainty in Europe.

According to foreign exchange specialist HiFX, the single European currency is trading at a four-year low against sterling right now.

Organisations looking to transfer money online between a eurozone country and the UK may therefore need to arrange a currency comparison in order to find the most favourable exchange rates.

Jason Gaywood, director at HiFX, has attributed this development to a number of factors, such as Francois Hollande's victory in the recent French presidential election.

"President Hollande has demanded a renegotiation of bailout terms for troubled EU members to increase the emphasis on growth rather than cutbacks in spending," he commented.

Mr Gaywood said this means France is putting itself on a "collision course" with Germany, which has so far insisted that the terms of the current European Fiscal Pact "be respected and maintained".

Uncertainty is also growing in the wake of the recent Greek election, the outcome of which was indecisive. Talks on putting a coalition government failed, so a caretaker administration will take charge until voters go to the polls again on June 17th.

Mr Gaywood noted that the Syriza Party opposes the austerity measures that are currently in place in Greece, which means that further conflict with the EU could arise should it secure an overall majority in the election.

"We are now in a catch 22 situation - if the EU stands firm and Greece defaults, its ejection from the euro will lead to a contagion risk," he commented.

Mr Gaywood predicted that Italy and Portugal could be among the first to pull out of the single European currency, along with the Republic of Ireland and Spain.

The Bank of England has warned that the eurozone seems to be "tearing itself apart", while it expects the turmoil to hit economic growth in the UK for some time to come.

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