Exchange rate: £1 above €1.20

The pound buys more euros now than since November 2008, according to a news clip on the BBC. Any Business Studies question with an international dimension gives you scope to talk about exchange rates. This might be a story for you to refresh in your revision, so that you can make a brief reference to it when you are looking to add application, analysis or evaluation to your marks.

The rise in the £ exchange rate effectively makes € priced goods cheaper in the UK, but makes British goods, priced in £ more expensive to countries in the Eurozone.

This seems to be largely due to uncertainty about the fate of the Euro. However, the £ has also risen against the US$. Many observers expect the £ to rise further over the summer

“It is at very tempting levels, but sterling is still undervalued against the euro,” said one specialist in foreign currency. “It should reach 1 euro 27, or 1 euro 28, in the coming months … we think it will reach 1 euro 30 by this autumn.”

The pound is recovering value that it lost in during the 2008 financial crisis. It’s likely to make imports into the UK cheaper, but present a competitive challenge to UK exporters. There’s more background and detail on this story in The Economist.