My take would be that Sterling has performed similarly against other major currencies with the exception of the Euro from 1999 to 2003 when it significantly over performed against the Euro.  Perhaps this reflects anglo scepticism about the prospects for the Euro in its early days - and as Mig says - particularly during the period prior to its formal introduction (Jan 2002) as the cash currency for all participating members.  Perhaps its a case of the Euro gradually gaining credibility and traction such thet 90% of UK trade is now transacted in Euros.

Euro - Wikipedia, the free encyclopedia

After the introduction of the euro, its exchange rate against other currencies fell heavily, especially against the U.S. dollar. From an introduction at US$1.18/€, the euro fell to a low of $0.8228/€ by 26 October 2000. After the appearance of the coins and notes in 1 January 2002 and the replacement of all national currencies, the euro then began steadily appreciating, and soon regained parity with the U.S. dollar, on 15 July 2002. Since December 2002, the euro has not again fallen below parity with the U.S. dollar but instead began an ascendency. On 23 May 2003, the euro surpassed its initial ($1.18) trading value for the first time. At the end of 2004, it reached $1.3668 (€0.7316/$) as the U.S. dollar fell against all major currencies. Against the U.S. dollar, the euro temporarily weakened in 2005, falling to $1.18 (€0.85/$) in July 2005, and was stable throughout the third quarter of 2005. In November 2005 the euro again began to rise steadily against the U.S. dollar, hitting one record high after another. On 15 July 2008, the euro rose to an all-time high of $1.5990 (€0.6254/$). In a reversal, in August of 2008 the euro began to drop against the U.S. dollar. In just two weeks the euro fell from its peak to $1.48 and by late October it reached a two and a half year low below $1.25.^[59] On 12 December 2008, the pound sterling fell to an all-time low of £0.89235 (€1.1206/£) against the euro.^[60]

notes from no w here

If I had to take a stab, I'd call that a sharp devaluation of the £ around '93, followed by a more or less steady climb (with a peak around '97-'99 - what happened there?) until the present crash, overlaid by a period from '99 through '03 where the € was undervalued.

This is certainly compatible with Jerome's diagnosis, and with Migeru's ideas about the relative weakness of the € around the time of its introduction.

The German reunification, OTOH, does not strike me as overwhelmingly obvious in that figure.

- Jake

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