EUR/USD, GBP/USD: A correlation tale
Since 1999, the tumbling euro has offered market pundits a profusion of topics to mull over, ranging from the determinants of currency movements to the do's and don'ts of central bank policy. But a more discreet dynamic has taken shape since, baffling traders and analysts over its cause and the extent of its duration. The continuously high positive correlation between the movements of the euro and sterling vs. the dollar has instilled an element of stability between the two rates, adding an essential variable in forecasting movements of the sterling derived from developments in the euro.
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