Euro to Pound

Currencies fluctuate based on interest rates, which reflect economic forecasts and the perceived health of each country’s economy. National debts, while significant, must be compared to GDP and projected future GDP for accurate evaluation. A high earner can manage a larger debt compared to someone with a lower income. The US, despite substantial debt, possesses a dominant economy with strong historical performance. Low long-term interest rates and a rising stock market suggest continued growth.

Stock market predictions, however, are not always reliable. Bearish forecasts persist even during market lows, as seen in March 2009 when the US stock market bottomed. Yet, the market has largely trended upwards since then, with the exception of the COVID-19 pandemic disruption.

A new political administration can influence interest rates and economic expectations. The current US administration has introduced numerous ideas, some of which are merely signals rather than concrete policies. While these plans may seem definite to the administration, significant resistance to certain proposals is inevitable. The final enacted plans are likely to be less impactful than initially announced, potentially experiencing delays, shorter durations, or reduced percentages.

Presidential power is limited, as enacting changes to tax codes requires Congressional approval. Lawmakers have their own agendas and recognize the temporary nature of presidential terms. House members, with shorter terms, may be more susceptible to pressure, but the Republican majority is slim. Senators, with staggered six-year terms, can more easily resist pressure, even within a Republican majority, as they anticipate future elections with different presidential candidates. Political maneuvering and negotiations are inherent in the legislative process.

Current displays of public deference and compliance often precede extensive negotiations. The legislative process involves intricate bargaining and compromise. Ultimately, the interaction between political agendas, economic forecasts, and market responses will determine the exchange rate between the euro and the pound.