Welcome back to our latest report on the goings on in the currency markets. Last week we had something of a mediocre week, but then that had followed a very good week so perhaps it was too much to expect a good result.
But then of course it does depend on what you are looking for, and the reasons behind looking at the currency exchange rates each time. Anyone heading abroad for a short break or longer holiday will want to see a stronger pound that gives them more for their money on the currency converter. But as far as businesses are concerned a weaker pound does have its benefits.
In this situation a weaker pound will be attractive to foreign travellers who are thinking of coming to the UK. It will boost our tourist industry – which is precisely why many London stores have already got their Christmas decorations out to buy. These are aimed at the tourists who are heading over to the UK to spend their money.
But how about our businesses – do they benefit from a weaker pound as well? As far as exports are concerned, yes they do. And for a similar reason as well. The more we can do to boost British business, the more it will help our economy as we try to extricate ourselves from the recession. A weaker pound can sometimes be better in some quarters than a stronger one. It all depends on how you look at it.
So without any further speculation let’s see which way things went last week. Did the pound have a good week and increase its standing for travellers abroad – or did it weaken and help the export market? Let’s find out.
An overview of the currency markets for September 14th – September 20th 2009
We had an excellent time against the US dollar the previous week. Over the whole week we had added on a fantastic three and a half cents. That is something we haven’t seen in a while, and it left us on 1.6699 at the end of Friday. So could we build on that or would we slide back in the opposite direction?
Well Monday didn’t kick us off to a great start. Perhaps predictably we finished the day lower than we had started it, losing more than a cent overall and finishing on 1.6565. Was this the start of a slippery slope that would leave us with a weaker pound by the end of the week, or would we get stronger as the week went on?
Day two didn’t bring any better news unfortunately. Those looking for a better exchange rate would have to wait a while longer. By the close of play on Tuesday we were staring at an exchange rate against the US dollar of 1.6474. Would we be able to rake back any of these early losses, or would the export markets be the ones to benefit this week?
Wednesday, the midweek point, did fare a little better, but not by much. There was a tiny amount of difference that resulted only in the pound finishing up on 1.6489. That equated to a gain of just 0.0015 overall.
So what would happen in the remaining two days? Was that small gain a sign of bigger gains to come, or would we be back to losses once more?
As it turned out Thursday brought no changes at all in the exchange rate. So that left us with Friday to try and make a play for a stronger exchange rate, if that is what we wanted. Of course things aren’t as easy as deciding what we want the pound to do, and indeed it turned out to take another nose dive at the end of the week. The final figure was a lowly 1.6333, which meant we had lost just over three and a half cents over the week as a whole.
That was somewhat ironic seeing as it was almost exactly the amount we had added on the week before. Perhaps it was resetting the balance more than anything else.
So let’s move on to see how the pound did against the Euro last week. Last time we were left with an exchange rate of 1.1442. That was a quarter of a Euro cent lower than we had finished on the previous week, so there was very little difference there all in all. But would we go the same way as we had against the US dollar?
Monday certainly seemed to start out that way, as we finished up on 1.1376 against the Euro by the end of the day. And if that was a bad start things got even worse on Tuesday for anyone thinking about going over to the continent for a short break. By then their pound was worth even less, as it came in at 1.1275 by the end of the day.
So what would happen from here on in? We had three days to go during this week and we had already lost out on over a cent and a half. How much more could we lose that might make all the difference to whether people went for that break or not?
Wednesday brought another drop to 1.1239, and although the pace of the drop had changed it was still looking ominous for those who wanted to see a stronger pound by the time the week was out. Could we possibly hope for a comeback against the Euro, especially given what we had already seen against the US dollar? It was looking increasingly unlikely.
Thursday brought no change in the exchange rates, leaving just one day to try and turn things around. But it was almost as if the pattern had been set and the British pound was intent on following it to the bitter end. By the time the markets finally closed on Friday evening we were standing on 1.1107. That meant the total losses for the week for the British pound versus the Euro were 0.0335.
So once again, nearly three and a half Euro cents lost last week. Two bad results for the travellers so far, but perhaps more encouraging ones for those wondering how the export market would fare in the future.
Let’s move hastily on to our third stop now, where the Hong Kong dollar awaits us. We enjoyed an increase of 0.267 here last time, but given the results this time against the US dollar and the Euro we can only expect another loss to be on the cards here. We could be wrong, but the pattern is not looking promising.
Our starting point is 12.942, but by the time Monday’s trading was over that had already dropped down to 12.838. Were we already on the slow and downward path we had followed in the US and Europe?
It certainly looked as if we were because Tuesday’s vigorous trading took us further in the same direction. By the time that day came to an end we were standing on an even lower 12.767. Was this once more setting a pattern for the remainder of the week?
If it seemed like it was, Wednesday at least bucked the trend a little. We saw a small increase there which bumped us up to 12.779. That was only a difference of 0.012, but it was enough to set us off in the right direction again.
There was no change on Thursday but Friday was still open to provide another chance to change the exchange rate in our favour. Unfortunately that downhill pattern was determined to come back with a vengeance, and indeed we saw the exchange rate trickle back down to 12.658. That gave us a loss for the week against the Hong Kong dollar of 0.284 – which is slightly more than the gain we had made the week before.
As you can see, there is a distinct pattern of significant losses on the cards here. The only good thing is that they are cancelling out the big gains of the week before, which at least means things are pretty much back to the way they were previously.
But we have two more places to visit yet – New Zealand and Australia. Last time we had experienced losses against both of these currencies, so if we do so again this week it won’t be a good result at all.
We were over two and a half cents down on the week before, leaving us with a starting point this time of 2.3641. Could we regain the loss of that previous week, or would we be on the way down to new depths?
Monday at least started on a good note, with the pound managing t
o pull itself up to 2.3683. It was only a small gain, but it was better than nothing. The question now was whether we could remain on the way up all week, or whether that was the only increase we would see.
Unfortunately we did head back down the following day, and by the close of play we were settled on 2.3546. Was this the start of a downhill path? It certainly seemed to be – but that path had a sheer drop in it on Wednesday. That was when we finished the day on 2.3143 – losing a massive four cents overnight.
No moves on Thursday left the way open for a poor finish to the week as well, as we landed on 2.3001. This equated to a drop of some six and a half cents in total – a huge loss and one that only the export market could possibly gain from, as well as a few savvy traders.
So finally we go to Australia, where the Aussie dollar awaits us on an exchange rate of 1.9347. Last time the Aussie dollar had added on half a cent, leaving the pound down on the week before – so what would happen this time?
Well once again we started with a poor exchange rate, and slipped back to 1.9298 by the time the first day of trading was over. But once again by Tuesday we were into a predictable pattern which took on the guise of a downhill slope. The final exchange rate by the end of that day was 1.9183.
We were almost expecting the pattern to continue by now, and we weren’t disappointed. Wednesday saw an exchange rate of 1.8931, and while Thursday remained static the week ended on a dismal 1.8809. That meant an overall loss of nearly five and a half cents.
So we would be right in saying it had been a dreadful week for the British pound. Let’s hope things can only get better next time.
Notable events in the world of currency
US dollar has tough time against the Aussie dollar
We weren’t the only ones to have a rough time against the Aussie dollar last week. The US dollar had finished on 1.1649 on Monday night, but was down to 1.1515 by the week’s end.
Canada has choppy time against the New Zealand dollar
The Canadian dollar finished on 1.3110 on Monday evening, but jumped to 1.3159 the following day before diving back down to 1.3118 on Wednesday. It managed to climb back up to 1.3146 though to close out the week.
Euro climbs against Chinese currency
The Euro had a good week against this currency – from a closing rate of 9.9436 on Monday it soared up to finish the week in style on 10.0404.
The story of the British pound against the Euro hit the headlines on the 18th September as the markets closed for the week. You can read the dire news for the pound on the Reuters website.
So there we have it for another week – and it has to be said it was a bad week for the pound if you were hoping it would increase its exchange rates against those other currencies.
Still we might be setting ourselves up for a better time next week, mightn’t we? We can but hope that is the case – but until then at least exports will be a little more buoyant. We’ll see you next time.
Yet again it is a dreadful week if you were planning on seeing how far your British pound would go anywhere abroad! We’re at the end of the summer holidays period now – at least as far as the school holidays are concerned – but some people are still going to be looking for a foreign break if at all possible.
That isn’t going to happen for me now, but at least the British tourist industry is going to be getting some cash out of me next week – I’m staying on holiday in this country! I wonder how far my cash will go?
So it is another good week for exporting then? The pound has had a bad few weeks in terms of dropping against other currencies. I wonder how much longer this will go on for? It looked as though things were improving but now I wonder whether that was really just a small and welcome blip in a downward slide.
Oh well, I won’t be trying to swap my British pounds to go on holiday anywhere else this year. I just hope things return somewhere around normal next year. I’d love to head to America but with the exchange rate like it is I’m not going yet!
Holiday places in the UK did seem to have a better year this year. I went on holiday in this country and I’m glad I did. I just didn’t have the time or the money to see how far my cash would go elsewhere.
Someone I know tried Butlins for a week as well and that was pretty good value for money all in. It’s good if you have kids, but then foreign holidays can be a nightmare with younger kids anyway, especially when it comes to the food.
We talk about the UK as if we’d draw the short straw by staying here but it’s really nothing like that at all.