Last week we saw a drop against the US dollar, a drop against the Euro, and a drop against the Hong Kong dollar. That's how well the British pound is performing at the moment.
There is no doubt that things aren't going well economically. And that is having a huge bearing on the performance of currencies all around the world. Depending on which two currencies you are comparing, some will be getting you a lot more money than you would previously have had, when you do the figures on a currency converter. But others will leave you severely out of pocket.
And if there is one thing we have learned over the past few months it is that we cannot tell what is going to happen next. If the word 'volatile' was invented for any particular reason, it would surely be this!
So let's take a look at the state of the currency markets as they stood last week, and start by seeing whether the pound could go any lower than it already has.
An overview of the currency markets for October 27th – November 2nd
Have you got used to the dramatic turns of fortune we've seen for the British pound against the US dollar yet? This has really given us something to look closely at.
Last time we left the pound claiming just 1.5625 US dollars, seeing a drop of nearly seventeen cents in a week. Could the journey from October into November bring better news, or would it be more of the same?
Well Monday didn't start off on a good note, seeing as it gave us an exchange rate of 1.5453 by the end of the day. It certainly left us to wonder whether this was just the start of another bad week to come.
Tuesday did bring better news though, as 1.5698 was the rate we were looking at by the end of the day. So finally some upward movement – but could it last? As far as the pound was concerned we desperately needed it to; we got too close to that $1.50 exchange rate last week for our liking.
And fortunately it did continue. Wednesday saw more good news than the day before, with the exchange rate going up to 1.6046 by the end of the day. Considering the way the currencies were performing against each other last week, it hardly seemed possible that we could start pushing back and fighting for a better exchange rate as soon as the following week.
But we've seen this happen before. Just as things start to look promising the pound slips back in the opposite direction again. But that wasn't going to happen this week, not yet anyway. Thursday ended with the pound exerting more pressure as it leaped up further to 1.6485. Could this carry on to the end of the week or would we see a slight fall back to a lesser position?
As it happened the latter statement was true. It didn't cause too much harm though, as the pound only dropped back to 1.6211. That may not have been the best way to finish the week off, but we were still nearly six cents up on this time last week.
In the current climate that is certainly something to celebrate, and after the seventeen cent drop we were reporting in our last report it certainly makes us feel relieved that we finally have something positive to talk about.
Of course there is still a long way to go. Talk of recession is still rife and if we do formally go into a recession then there is no way of telling how low the exchange rate with the dollar could go. But let's not get too maudlin on this – we have good news to celebrate this week with a renewed strength in the pound, so let's focus on that and hope that we can do more of the same next week.
So from here let's change direction and head over to Europe, to see how well the pound did against the Euro last week. Previously it hadn't done too well, although the Euro is very unlike the US dollar in that it is also feeling the strain at the moment. Quite often the pound and the Euro both find it hard going, so any head to head between them can go either way.
1.2405 was the exchange rate we were left with against the Euro last week, when that currency definitely came out on top. The hope this time around was that the pound could recover some of that lost ground, and although the beginning of the week was a little dubious we might just be seeing what we hoped for.
Monday's closing exchange rate was 1.2402, so very little difference against the end of the week before – although what little difference there was went in favour of the Euro.
But Tuesday was the day that the pound showed its mettle and bit its teeth in to make an impression. By the end of trading on that day it had pushed the exchange rate to 1.2532. Not as big a jump as we had seen with the US dollar, but it was going in the right direction and that was what mattered.
So could it push back still further and succeed in sticking to a rather more competitive exchange rate for the rest of the week too?
Well 1.2565 was the figure we ended on the next day, so while the rise was fairly minor it was still a move in the right direction, and a welcome change from all the losses the pound had been suffering in recent weeks.
And if the midweek point didn't provide as much good news as we had hoped for, Thursday certainly brought better results. By the end of trading on that day we had managed to push back still further and get the rate up to 1.2647. And there was more to come by the close of play that week as well.
The pound wasn't going to let the week end without one final attempt at pushing that rate higher. And in fact we closed on Friday with the exchange rate at 1.2708 Euros to the pound. That equates to an increase of 0.0303 since the same time the week before – and that's worth celebrating.
So did we do any better in Hong Kong? We saw a loss the previous week so it would be good to see an increase this time around. Well once again it was going to be an intriguing week. We were starting from the closing rate of 12.285, and Monday's trading brought a bigger shock as that slipped back to 11.977. Was this going to be another week to forget for the British pound against the Hong Kong dollar?
Tuesday's figures begged to differ. By the close of play we had exerted the pressure again and ended up on 12.171. Could we actually be looking at an upward trend at last?
It seemed we could. Wednesday continued the pattern as the pound fought back and finished by claiming 12.440 Hong Kong dollars to the pound. And Thursday got better still and reached a peak for the week of 12.780. That peak means of course that we lost some ground on Friday, but seeing as we finished by claiming 12.565 Hong Kong dollars to the pound it wasn't too much of a disaster.
That means the week as a whole saw the British pound gain 0.28 on the exchange rate. Perhaps that was not very much, but it was a help and it was going in the right direction.
At this point we always hop across to New Zealand, a country whose currency has not been doing very well against the pound of late. In recent weeks we have continually noticed that even while the pound has performed dreadfully on occasion against the US dollar, it has gained ground against the New Zealand dollar – and often the Australian dollar too.
So what happened last week? Was the pound able to continue that pattern and exert the pressure against the dollar?
2.8324 was the closing rate the week before, after a week's worth of trading that saw us taking huge gains on certain days, while losing them partially the next. The figures continued to go our way on the Monday, when we closed at 2.8527. Was this going to be another week of seesaw patterns?
Tuesday saw a drop in the exchange rate that w
ent in favour of the New Zealanders, as the tussle ended the day on 2.8429. But it was Wednesday that brought the biggest news – and the biggest drop – of the week, as the exchange rate plummeted to 2.7873 by the close of play. Would we now see it go back up again as it had done so many times before?
This time the answer seemed to be no. By the end of Thursday it had only moved slightly to 2.7842, and there was very little change on Friday either, as we finished the week by claiming 2.7814 New Zealand dollars to the pound.
That marks a drop of 0.051 over the course of the week – not too bad and perhaps to be expected given the number of gains we have made over the past couple of weeks. Perhaps this was to be expected.
So let's move on to Australia now to see how we did there. We were left with an exchange rate of 2.5310 from the previous week. Would we be able to improve on that or would we see a similar pattern to what we had seen in New Zealand?
Well there was a slight drop for us on Monday, as the exchange rate finished for the day at 2.5295. The trend continued into the next day as it dropped back a tad further to 2.5112. But Wednesday brought another drop that was rather larger this time, bringing things down to 2.4719. It seemed as if we were going to finish down in Australia just as we had done in New Zealand this week.
Thursday seemed to prove that to an even greater extent as the final exchange rate of the day was 2.4287. But we did regain a little ground on the last day, as trading closed for the week on 2.4459. So that makes a loss to us of 0.0851over the course of the week.
So perhaps not the worst week we have ever had – last week is a far stronger contender for that title! – but not the best either. But then given the current situation we should probably take the wins where we can, even if they are very small ones.
Notable events in the world of currency
US dollar comes out on top
Amid all the excitement about the Presidential elections, it seems right that the US dollar should be enjoying a period of particular buoyancy at the moment. This is typical of the US dollar though – when times are hard it has the ability to bounce back strongly. So it should be safe for quite a while to come.
The troublesome yen?
The Japanese yen has been noted recently for its unreliability. And the week in question began with warnings that steps may need to be taken to make sure the currency calms down.
This is just another example of how a worldwide economic crisis can damage individual currencies.
Euro takes a pummelling
The strength of the US dollar isn't doing other currencies much good at the moment, not least the Euro. However the Euro did manage to fight back this week and finished some three cents up on the beginning of the week.
One feels that this isn't a situation that will last very long though.
It's always good to keep tabs on the current financial and economic situation, and one website worth keeping tabs on is www.financialadvice.co.uk. This has a section on the UK economy which features regular news articles on the current state of play. It certainly makes worthwhile reading, and it is very accessible and easy to read as well.
So there we have it for another week. Who knows where the pound will stand against all those other currencies next week; we can only wait and find out. See you then.