Week 44, 2011: The Euro

Summary: The Euro took a big hit this week as the world waits for Greece to decide what it is going to do. We've revisited a graph from the end of May to assess how the Euro is doing.

What does the chart show? This chart shows the average exchange rate of the Euro against both the US Dollar and the British Pound. By taking the average of the two, we are concentrating on the fluctuations of the Euro rather than of the two other currencies. It shows how many Dollars/Pounds a single Euro can buy, so a higher number represents a stronger Euro.

Why is the chart interesting? It looked like the Euro was recovering after the trough on the 4th October, as the world chose to trust the plans for recovery laid out by the EU leaders. However, the events in Greece this week, with talks of a possible referendum, the resignation of the Prime Minister, and now a confidence vote in the Greek parliament, have spread serious doubt that Greece will be able to stay in the Euro. This has led to a steep drop in the strength of the Euro since the 1st November, and this could continue over the next couple of weeks if the political situation in Greece does not stabilise.