Welcome back to another weekly report on the state of the currency markets, where we shall see how the British pound performed over the last week. If you read the previous report you will remember that the British pound enjoyed one of the best weeks it has seen in a long time. We managed to achieve a better exchange rate against every one of the five major currencies we look at each week, so that was certainly something to celebrate last time around.
But the question now is whether we can repeat that feat this time. Last time we saw the pound add on nearly three and a half cents against the US dollar, which certainly gave us something to think about as the weekend got underway. The pound also did well against the Euro, adding on a total of 0.0157 Euro cents against the European single currency. The good results continued elsewhere as well, as the pound racked up an increase of 0.269 against the Hong Kong dollar.
Sometimes we can achieve these kinds of results and then it all goes south once we report back on how the pound did against the New Zealand and Australian dollars. But that wasn’t to be the case last week. The New Zealand dollar could not withstand the strength of the pound this time, and the pound added on a total of well over two cents against the currency.
It was a similar story against the Australian dollar as well, as the pound managed to up the exchange rate by 0.0173 all in all. As you can see it really was a good week, but it did make us wonder whether this week would be very different. We cannot remember the last time we had two really good weeks like this consecutively, so let’s take a look now to see whether this week might be the one.
Did we do as well as we were hoping? Or would those other currencies fight back?
An overview of the currency markets for January 18th – January 24th 2010
So here we go then with a look at how the British pound performed against the US dollar last week. The starting exchange rate was 1.6314 after the surge experienced throughout the week which had added on 0.0338.
We started the week off on the right foot although we only managed to push the dollar by a very small amount. By the time Monday came to a close and trading had ended for the day we were standing on an exchange rate of 1.6337. But if we could build on this small increase it would be good news all in all.
Let’s see what happened next. Tuesday again saw just a very small difference in the exchange rate, but unfortunately this time it went in favour of the US dollar. The final rate for the day this time was 1.6331, so this did at least mean we were still up on the week so far from the point we had started at.
But Wednesday proved to be the turning point for the pound – and unfortunately it wasn’t the turning point we wanted to see. This was because it didn’t go in our favour. As much as we wanted to see the pound do well throughout the week so it would mirror the success of the week before, Wednesday proved that we wouldn’t always get what we really wanted.
The closing exchange rate as the markets closed for the day was lower for the pound, at 1.6258. So we were now at a lower point than we had started the week at, and with just two more trading days left to go it left us wondering whether we had seen the best results of the week already. Was there anything the pound could do to regain some of the strength of the week before and finish this week on a high as well?
The answer came on Thursday, but unfortunately it wasn’t the kind of answer we really wanted. The exchange rate at the end of this penultimate day of the trading week was 1.6165 – significantly lower than we were hoping for and leaving us in a vulnerable position to try and rectify the following day.
And indeed it did prove to be too late to try and do anything about it, because the pound now seemed to be on a downward spiral with the US dollar in charge. And the final rate for the week as the weekend got underway was 1.6130, so the US dollar was definitely in charge this time around and the pound could not make it two in a row.
But how bad was the overall damage? In total the pound lost out on 0.0184, so it was clear that it could have been a worse week than it was. With that said though it was disappointing to lose so much when last time had been such a success.
So with that in mind let’s move on now to see whether the pound was in for a similarly bad time against the Euro. The starting point here was 1.1350, after having added on a total of 0.0157 last time around. Could we replicate that now?
The first day of the week kicked off on a good note anyway, as the British pound climbed a little further to settle on 1.1370 at the close of play. First blood had gone to the pound then, but did the Euro have anything in reserve to fight back with the following day?
The answer came as something of a surprise – particularly to those who thought the Euro might just be getting started. By the time Tuesday was over the exchange rate between these two currencies stood at a somewhat surprising 1.1437. The pound seemed to be having another good week – but would it last the distance or would the Euro come back with something?
Wednesday became even better still for the pound as it broke through another barrier and claimed an exchange rate of 1.1504 by the end of the day. We had added on over a Euro cent during the week so far, but would we be able to hang onto it?
Thursday showed the first sign that the Euro might have something in the locker to fight back with. By the evening the exchange rate had dropped back to 1.1494, but the pound was still out in front for the week as a whole. And as it turned out it would stay that way. Friday’s closing rate was recorded as 1.1411, which meant the pound had added on a total of 0.0061 over the week as a whole.
So far then we were looking at one good result and one loss, so which way would the Hong Kong dollar go?
The final rate for the week to kick us off with this time around was 12.659, and once again the pound was clearly eager to start off on the right foot. By Monday night the exchange rate had improved slightly to 12.680. Not a big increase but enough to start off with. Could we now duplicate that throughout the week?
We actually lost a little bit of ground the following day as the pound dropped back to 12.678, but it wasn’t enough of a loss to worry us unduly just yet. There were still three days of trading left to go though, so anything could happen yet.
The following day saw the Hong Kong dollar in fighting form though, as it pushed the pound back down to a lower rate of 12.626 at the end of the day. Was this the turning point that the British pound could not come back from as the week progressed? Or did it have more fight in it yet?
Thursday told part of the story as by the end of the day the exchange rate had altered to 12.559. The drop confirmed that the Hong Kong dollar had turned the tables against the British pound, and it didn’t seem possible that the pound would be able to come back from it to claim another successful week. Not in a single day anyway.
And indeed this was true as the pound fell further to 12.535 by the end of the week. This equated to an overall loss of 0.124 this time around, so it was clear the Hong Kong dollar had got the upper hand.
So with two bad results and one good one so far, we move over to New Zealand to see how we did there. Last time we finished on a rate of 2.2129, adding on over two cents in the process, so let’s see what we can achieve now.
Once again we saw very little activity on the first day of the week, with a slight fall for the pound to 2.2121. Thi
s wasn’t enough to unduly worry us, although it was necessary to make sure that we didn’t let that slip turn into a huge slide.
That didn’t happen on Tuesday though as the exchange rate went in real favour of the pound and jumped up to 2.2234. This was good news but it didn’t prepare us for what we discovered on Wednesday. That was when the exchange rate leapt up to an impressive 2.2534. This was turning into a positive week for the pound against the Kiwi dollar – but could it hold up through another two days?
There was a slight dip back to 2.2517 on Thursday which gave us pause for thought, but when Friday arrived it was clear that the pound had more to come. By the time the week was over the final exchange rate was 2.2699. That meant the pound had added on a total of 0.057 cents – more than five and a half cents all in all.
So could we do the same in Australia? These two currencies often come out the same – whether that is for good or bad. The last exchange rate we had from the previous week was 1.7645, so could we beat that this time?
We saw a slight drop on day one, much as we had in New Zealand, which put us back to 1.7636. But the real action started on Tuesday evening when the pound recorded an exchange rate of 1.7775. That increased to 1.7795 on Wednesday as well, so we were doing well so far.
The changes had been small ones thus far though, so it didn’t look as if we would experience a similar pattern in Australia as we had seen in New Zealand. We slipped back a little on Thursday as the Aussie dollar got the better of us, but only to 1.7773.
The real delight was saved for last in this case, as the pound climbed to 1.7869 on the last day of the week. That meant we had done well overall, adding on a total of over two cents all in all.
So while not every result gained last week was a good one, we had more than enough good results to make it a success all in all.
Notable events in the world of currency
Canadian dollar has up and down week against the Aussie dollar
Monday night recorded a figure of 1.0522 between the two currencies, while just four days later it stood at 1.0515. But in between the Canadian dollar fell back to 1.0471, so clearly it regained its strength as the week came to a close.
Swiss franc takes on the Aussie dollar – and wins
From an exchange rate of 1.3194 on Monday night, the Swiss franc had a delightful week against the Aussie dollar. By Friday night it was on 1.3524, so it was a good week all in all for the Swiss currency.
The US dollar climbs against the Aussie dollar
It clearly wasn’t a good week for the Aussie dollar last week. From a Monday evening rate of 1.0794 the US dollar managed to climb as high as 1.1078 by the end of the week.
The pound experienced a good time last week in part due to some business news regarding the future of Cadbury. You can read more about this in the Reuters currency news section.
So there we have it for another week. What will happen next time? Will the pound enjoy better results once again after this reasonably good week? We’ll be right here to tell you, so we’ll see you then.
Hmm, not as good as last week then? I can’t say I am surprised because the pound never seems capable enough of stringing two good weeks together. Last time we had some great results and while we had a couple of good ones this week too, we were never going to have five out of five.
Still it is always interesting to see what happens when the pound takes on these other currencies. I reckon it will get stronger overall in the coming weeks and months – it might just take time to get there. I can’t imagine it doing really badly.
I don’t think the pound did too badly last week. It’s nice to see a week when we do get five good results but we can’t expect it all the time. We had enough good results this week to make it a reasonable one didn’t we? What I hate is when we have every single result as a bad one. That’s worth moaning about but a ‘some good, some bad’ week isn’t that bad.
And considering how the economy is at the moment it’s not surprising all the currencies are going up and down like yoyos. It won’t last.
I think the readers who have commented above are getting into a bit too much tit for tat on this. The reason why the pound does well some weeks and not so well during other weeks is simply because this is how the nature of the currency markets goes.
We can’t expect it to be all good all of the time. Not only would it be boring, it would also be unrealistic. Bad weeks adds to the drama and I am sure this site gets even more traffic because of it. Who would keep reading if they knew what the ending would be?
I agree with the ‘tit for tat’ comment but isn’t that why we all tune in and read the articles and the comments? It is for me – that’s why I am commenting on an article that is already a few months old! It is always good to pick up on new comments and add more to the conversation.
Of course the pound will have good weeks and bad weeks – this is just how things go. I understand the negativity when it keeps on doing badly and that’s perfectly as it should be. But we’ll soon see it pick up again I’m sure, because that is how things go. Just as it was worth two dollars for ages, it will be worth a lot less for ages now too.