Most people mistakenly believe that a highly valued currency reflects a strong economy (particularly for those who would dismiss reality in favour of a belief that all is peachy).

In the case of the Euro's (over)valuation, it's more an indicator of the Eurozone's debt burden and ineffective monetary policy.

A little QE would help a lot, but the Eurozone is structured in a way which prevents the ECB from implementing monetary policy, making a QE tactic not only difficult to implement, but unpalatable to the more powerful Eurozone members who would ultimately face the bulk of the burden for it, whilst the weaker members would enjoy the bulk of the benefits.

...so the only agreeable solution is to carry on with austerity, which won't help the economy, but will help to keep the Euro intact and keep the stronger economies presiding over it.

When I went on holiday to Germany way back in 1971 I recall the pound being worth about 8DMarks. When they Germans adopted the Euro it was worth about 2DMarks. During all of that time I can recall that Germany kept a strong economy whilst the UK went from crisis to crisis closing down most of its Car manufacturing industries/Coal mines/Steel works etc etc. Hard not to draw a conclusion, that a strong economy relates to a strong currency, or vice versa.

Yes I remember those days in fact it was slightly higher when I was posted to Germany in 1972 Forces exchange rate was DM 9.30 to pound. When I was posted there again 1982 it had dropped to DM 5.40 and by the time I left in 85 was around DM4!

Is that not Eurozone problem though strong Germany weak Greece Spain Ireland Italy ?

Yes but does that not help to act as a stabiliser? In the UK we have things going up and down like a yo-yo!

Obviously worrying some in the eurozone

http://m.bbc.co.uk/news/business-21408533

yes, remember those days,

4 Singapore Dollars to £ now down to 1.94
8 Hong Kong Dollars to £ now up to 12
2 Australian Dollars to £ now 1.5

but are we happy ??
YES ! !

If you read the daily Forex analysts it's a lot more complex and is global led. Japan are presently trying to reduce their currencies value. Finance houses buy and sell in massive quantities and sometimes on Forex they name who is buying.

A few years ago the euro was £1 = 1.59€ and the dollar was £1 = €2. I don't remember the UK doing particularly well then Infact the Eurozone was supposed to be booming!

Yes the BBC article talks of the other currency's and I appreciate more than just sterling euro involved. But point is rumblings are starting re euro policy obviously France are not happy no doubt along with Spain and others although not mentioned. Suppose as always time will tell.

The emergency parachute seems to have failed to open this time, it's continuing to drop. At this rate I can see it getting worse than it was about 6 months ago when it hit another all time low IIRC.

The BoE report released yesterday was a LITTLE bit more upbeat than was originally thought, be interesting to see if that arrests the drop!!!!

I think today's news will have a greater effect.The eurozone recession deepened in the final three months of 2012, official figures show.

The economy of the 17 nations in the euro shrank by 0.6% in the fourth quarter, which was worse than forecast.

It is the sharpest contraction since the beginning of 2009 and marks the first time the region failed to grow in any quarter during a calendar year.

It followed news that the economies of Germany, France and Italy had all shrunk by more than expected.

Hmm. Watch this space then. Pound is STILL dropping at the moment. Sod's law it ain't worth spit just at the time I need to change some!!!

It's timing. The pound used to be worth 257 Yen back in the late 90s, then it slumped to 120 last year and is now in the 140s. Before long, it will be back up to 180.

The same with the Euro. Right now, the market is buying currencies that are commodity backed (NZD, AUD) and those deemed safe (USD,EUR,SGD).

The pound will be back at 1.25+ in 2-3 years time but until then you'll see it trading rangebound between 1.10 and 1,20 for the next year.

according to an old boy I met there used to be $4 to the £1
but that was many many many years ago.............

Domino thinking back to when I was a boy, (same decade as you perhaps) a half-crown was often referred to as half a dollar.
I went to school in Germany for 6 months in 1967 and was a direct "beneficiary" of Harold Wilson's pound in your pocket speech. The pound in my pocket certainly was affected - the exchange rate went from 8 DM to 6 overnight, enabling me to pay my rent, but little more.
Against the dollar it fell from 2.80 to 2.40 I think. Now it would presumably be about 1.80 or less. And still the German export machine powers on.