5 Strongest Currencies in Europe to Consider as a Trader

The global forex market attracts investors from around the world. For some investors, it forms the basis of a profitable portfolio. Others, meanwhile, use fluctuations in global currency prices to diversify from other investments. But there’s no doubting its popularity either way. A report produced by the Bank for International Settlements every three years records trading volumes in the market. And, in 2019, the average daily forex trading volume stood at $6.6 trillion.

What makes European currencies so attractive?

Some world currencies are, as you’d expect, more popular than others. The US Dollar is a clear favourite in terms oftrading volumes, but European options also feature prominently. And that is despite the fact that, since the start of the 21st century, Europe – as a continent – is home to one single economy and currency in the form of the euro.

The euro is the official currency of 19 European Union(EU) nations – including major economic hitters such as France and Germany. But don’t let that distract prospective investors from other options. The British Pound and Swiss Franc remain strong currencies in their own right, while it is also worth looking at some of the continent’s smaller options for trading opportunities.  

5 European currencies to consider

GBP/USD

The Great British Pound (GBP) and United States Dollar (USD) pairing is formed by two of the world’s oldest currencies. The pair’s nickname – “the Cable” – is derived from the underwater cable that carried exchange rates between London and New York. And the enduring resilience of both currencies over the years make it an ever-popular staple for forex traders worldwide.

Part of its appeal comes from the global profile of both the UK and US economies. As such, it means plenty of potential for price movement – and opportunities for traders to benefit.

EUR/USD

Of course, it’s no surprise the euro (EUR) features as one of the strongest European currencies. One of the attributes that makes the EUR/USD pairing so popular is its high liquidity. While the respective economies are among the world’s strongest, this pairing isn’t immune from volatility either. This is particularly the case in times of economic and political upheaval.

In recent years, issues such as Britain’s decision to leave the EU and growing tensions between the US and China haveplayed their part in keeping EUR/USD investors on their toes.

USD/CHF

In times of instability, don’t be surprised to see investors add this pairing to their portfolio. The Swiss Franc (CHF) comes with a reputation of being a safe haven currency due to the domestic political and economic stability it enjoys. Switzerland is one of the world’s leading financial and business hubs, which means the country benefits from a strong flow of money.

That’s not to say that it’s always plain sailing, however. In 2015, the Swiss National Bank took the step of scrapping CHF’s peg to the euro. And the shock was felt by investors worldwide.

USD/PLN

Less obvious a choice when it comes to European currencies is the Polish Zloty (PLN). It’s one of the continent’s oldest and, while recent events in Ukraine have negatively affected its value, the country has no plans to adopt the euro just yet. And national leaders are confident in that stance, no doubt buoyed by recent economic performance.

Indeed, Poland was the only nation in Europe to avoid recession in the wake of the 2010 global economic crisis.And there were similar green shoots following the Covid-19 pandemic.

USD/BGN

One other country that’s expected to adopt the euro is Bulgaria. It is thought that it’ll now take place at the start of 2024. But, for the time being, the Bulgarian lev (BGN) offers an interesting alternative when investing in European currencies. And not even the expectations of joining the euro have undermined the comparative strength of the lev.

The lev’s stability has helped Bulgaria to emerge from recent fiscal crises. Some experts believe that, even now, the country’s prospects are much better if the lev were to be kept post-2024.