Yes it is that time again when we take a look at how the British pound has fared against the major currencies during the last week. But how are we starting out this time around?
Well we had improved slightly on the week before last time, after bagging two good results over that week. We still had three losses though, which left us worse off than we had been the week before. Still, that was better than we might have had and we are hoping now that we can go onwards and upwards to be able to strengthen the pound and see better results on our currency converter.
But is that too much to hope for? After all, the pound hasn’t exactly been bringing home the best results of late has it? The week before last saw some very poor exchange rates by the end of the week. They were bad enough to make us wonder whether the good results of previous weeks were now being erased completely.
Some have speculated that after some hard work by the British pound we were now in for a downhill run. Obviously we are hoping that this isn’t the case, but at the moment it feels as if this is the only way things can progress. Can the pound put a halt to its mediocre exchange rates, or will it continue to slide as it has done in recent times?
We shall of course be looking for more clues this week, as we sift through the results the pound gathered in against the US dollar, the Euro, the Australian dollar, the Hong Kong dollar and of course the New Zealand dollar. And with that in mind, let’s get started right now.
An overview of the currency markets for August 24th – August 30th 2009
Thankfully, even though we had a loss against the US dollar last time around, it was a very small one. The pound dropped by just 0.0037, leaving us on 1.6590 as the week came to a close. The question now was what would happen this week?
Well as Monday got off to a start and progressed through the day, it was clear that first blood would go to America. The final exchange rate in operation at the end of the day was 1.6497. So here we were just one day into the week and nearly a cent down already. That didn’t bode well for the week ahead, but with four days still to go anything else could happen. And for our sake we hoped it would be good.
Unfortunately – and perhaps predictably – the British pound didn’t have a good day the next day either. We ended up even lower by the close of play, as the pound sank lower to 1.6388. If we were going to end up losing a cent a day over the week, the final exchange rate on Friday wasn’t going to be too promising at all!
And if we thought that could be a little too pessimistic, the exchange rate at the end of trading on Wednesday was even more frightening. That was when the pound sank as low as 1.6252. So far we had lost out on nearly three and a half cents – and there were still two more days to go before the week was out. This didn’t look like it was shaping up to be a good week’s work for the pound – not against the US dollar anyway.
The pace of the rot slowed down considerably on Thursday, but there was still a loss to contend with. By the close of play the pound stood at 1.6206. There was just a single day left now, and it seemed out of the realms of possibility that we could hope to regain the losses we had made so far. But could we grab back any of those losses at all – or would we make even more?
Friday finally came and went and put us out of our misery. And luckily for us there was some good news – it was just a case of being too little, too late. We did push things back up to 1.6352 though, which meant we had lost a total of nearly two and a half cents over the week as a whole. It could have been worse if it hadn’t been for that last minute surge upwards, but it was bad enough.
Onto the Euro now, to see how the pound performed against the European currency. We lost half a Eurocent the previous week, which landed us on 1.1551 at the end of the week. What would happen this time?
Monday got off to a poor start with another loss for the British pound. It wasn’t huge, but it left us on 1.1518 at the end of the day. Did this mean we would end up having another similar result to the one we had seen in the US? That wouldn’t be particularly good news, and if we continued to see more losses during the remainder of the week that would be exactly the kind of situation we’d be looking at.
Let’s move onto Tuesday now to see if we can detect a pattern for the rest of the week ahead. Would we end up with a good figure or a bad one? As you might expect, given the evidence from our tussle with the US dollar, the figure wasn’t good. We finished up on 1.1440 by the end of trading on Tuesday, which meant we were going down the same familiar downward slide that we had done with the US dollar.
Wednesday didn’t bode well for the rest of the week either, with a closing figure of 1.1389 at the end of the day. Could the pound find something from somewhere to try and stop the downward journey it had got itself on, or was this destined to carry on for the whole week?
Well it did at least appear to be putting the brakes on by the end of the following day. That was when the pound ended up on 1.1358 – showing that the rate of loss appeared to be slowing somewhat. The question now was whether it could stop the rot entirely, turning things around on the last day of the week. This looked to be similar in pattern to what we had experienced against the US dollar – and indeed that last minute perk up did occur here as well.
The final figure for the week was 1.1384, which was only slightly up on the previous day. But it meant we had minimised the losses a little, to 0.0167 in total.
So that meant two losses out of two results so far during the week. What would happen in Hong Kong, our next stop?
We closed on 12.830 the week before, after losing a total of 0.027 all in all. But after two bad results so far this week, was it too much to hope for that the pound would do better this week?
We certainly had the almost expected bad start that we knew would be a possibility, as the pound sank down to 12.786 by the end of the day. Would we now follow the traditional pattern of three more poor days followed by an almost half hearted attempt to recoup some losses at the end of the week?
Let’s find out. The pattern certainly kicked into action on the second day out of the five, when the pound slid down a bit more and claimed just 12.701 Hong Kong dollars. There was an even bigger drop on the midweek point though. This was when the pound slipped back further and could only muster up an exchange rate of 12.596 at the end of the day.
There were just two days to go now, and if this same pattern was going to prove accurate here too, we would expect one more poor result followed by a last minute spurt of energy on Friday.
And in fact this was exactly what we got. Thursday saw a closing rate of 12.561, so although the losses had slowed down a bit from earlier on in the week, they were still very much in force.
But Friday produced a figure of 12.674, which meant the total losses weren’t as bad as they could have been. They still amounted to 0.156 though, so the pound still racked up its third loss out of three for the week, leaving just the Kiwi and Aussie dollars to go head to head against.
Let’s move over to New Zealand now to see what that held in store for the pound last week. We had a pretty good week last time, landing on an improved exchange rate of 2.4275 at the close of the week. But was it going to be wishful thinking to assume we could repeat that again now?
Well it certainly seemed that way – and the message came through very early on. By the end of Monday we were looking at a lower exchange rate of 2.4032. And if that didn’t bode well then Tuesday certainly made things look even worse. That gave us a closing rate of 2.3833 – and the pattern we have now become familiar with this week seemed to be kicking in once again.
The following day saw the midweek point and we were on 2.3780 by the end of the day. So if things were going to pan out the same once again we’d see a lower figure the next day and a higher one on Friday.
And in fact that is exactly what we got. Thursday saw a figure of 2.3741, before the pound managed to fight back and claim an exchange rate of 2.3802 on Friday. It wasn’t enough to claim a victory with though, and in fact we lost out on nearly five cents on the whole over the week.
Moving swiftly on to what must surely seem like another loss in the making, let’s see whether Australia could possibly give us anything better for once. The starting point here was 1.9864, so we had our work cut out for us if we wanted to try and gain a two dollar exchange rate, given the pattern we were working with.
And as it turned out, Monday alone seemed to point the way to another series of losses over the whole week. By the end of that first day of trading we were settled on 1.9617. That dropped further to 1.9511 the very next day – and then we bucked the trend.
Wednesday actually led to an improvement by the pound which landed us on 1.9547 at the end of the day. It wasn’t enough to lead to a great result though – it seemed as if we were destined for a bad week all round this time.
Thursday saw another small drop to 1.9424, and then on Friday we finished up on 1.9347. This meant an overall loss for the week of just over five cents – giving us a total wash out performance against both the Kiwi and Aussie dollars.
And of course, a totally bad week all in all.
Notable events in the world of currency
The Euro does well against the US dollar
Sometimes the Euro turns out better than the US dollar when you put the two up head to head. It went from 1.4323 on Monday evening to 1.4364 just four days later. It wasn’t much of a difference but every one counts.
An up and down affair between China and New Zealand
A figure of 0.2132 went up to 0.2144 before sinking back to 0.2131 between the Chinese currency and that of New Zealand last week. Who knows what might happen in the coming weeks?
Canadian dollar takes a nosedive against the Swiss franc
From a strong position of 0.9831 on Monday evening, the Canadian dollar slid during the week and ended up claiming 0.9773 Swiss francs on Friday evening.
One aspect of the recession has been the fragility of many of the world’s currencies. And an offshoot of this has been the fact that many exports have struggled to remain afloat. This news story from Bloomberg – illustrates how importing and exporting have been affected.
So there we are for another week. And a poor week it was for the British pound. Could we hope for better news next time? Let’s hope so – otherwise we could be heading for a depressing September as well!
Intersting write-up on the currency but how come you talk about a drop the pound against other currencies as bad and a rise as good? I have always regarded a drop as desirable as it helps make exports more competitive and has no impact internally (apart from making imports more expensive)!
Good point, Alan. I agree. I think we have become a country of doom and gloom, and when we see the pound dropping like a stone as it has in the past, we all get caught up in worrying about what will happen next!
A weaker pound IS good for exporting, and it is also good for the tourist trade. It makes the UK a more desirable country for people to visit. The big problem is for those living in the UK who want to try and take a well earned holiday. It’s simply too expensive! I know I’m not going abroad this year as it’s too pricey.
It’s all very well bouncing back and forth and discussing how good or bad things are when the pound is doing well or badly. I understand that a strong pound is good for some people and bad for others, and so on. But what I really like about these reports are the short bits at the end, where we get to see which other currency pairings have been doing well or not so well over the last week. It helps to keep ahead of what is going on and if you want to build some knowledge of the currency markets, this is a good introductory way to do it.
When it really comes down to it, a drop against other currencies for the pound isn’t necessarily a good thing. It depends on what viewpoint you have and what aspect of the currency exchange you are interested in. A weak pound means that everyone in other countries regards the UK as a weak country – you only need to read the news to know that.
That’s the point I think – it’s not all cut and dried and you never know whether a drop is good or bad or vice versa. It just depends on where your interests lie. It IS good for exports though, definitely.