Pound at record low: Europe's currencies continue to weaken

The US dollar continues to be in high demand on the financial markets.

In return, other currencies are coming under considerable pressure.

During the night of Monday, the euro fell sharply and fell again to a 20-year low.

The British pound even fell to its lowest level against the dollar.

One euro cost around 0.95 dollars that night, which is the lowest level since 2002. The British pound fell by almost 5 percent at times to 1.0350 dollars.

That was a record low.

Both the euro and the pound recovered somewhat in early trading on Monday.

And what is the relationship between the pound and the euro?

The British pound has also recently lost a lot of value against the European common currency.

A pound still cost 1.19 euros in August, but it is now only worth 1.10 euros.

What a strong dollar does

The strong dollar is having an impact in a number of places.

From the point of view of the euro zone, for example, it makes the prices for crude oil and gold even more expensive because these commodities are traded primarily in dollars on the world markets.

In addition, goods imported into Europe from the United States are becoming more expensive.

In turn, goods from the eurozone and the UK are becoming cheaper in the rest of the world, which should have a positive effect on local companies and their sales.

As a safe alternative, the dollar has long been benefiting from the many critical developments in the world, especially the war in Ukraine.

The euro is primarily burdened by the energy crisis in Europe.

In addition, the US Federal Reserve has recently raised its interest rates much more decisively than the European Central Bank, for example.

This also attracts investors to the dollar area.

The outcome of the election in Italy, where right-wing forces gained the upper hand, may have weighed on the euro.

The British pound has drastically lost value in the past few days.

Experts cite the strong tax cuts and other relief measures of the new government under Prime Minister Liz Truss as a factor of uncertainty.

The financial policy course is causing the foreign exchange market great concern in view of the rising national debt, commented expert You-Na Park-Heger from Commerzbank.