So the question this week is whether the second week in December was any better than the first week. It surely couldn't be any worse, after the large number of disappointing results we had last week.
There has been plenty of very negative news regarding the position of the pound over the last few days, with some people suggesting that the UK government should be doing all it can to support the pound during its times of woe.
But while that might indeed be going too far, there is no doubt that the pound is struggling. And we will see just how much when we take a look at what happened in the currency markets last week.
As we approach Christmas, many people are finally getting out and about and starting to spend some money. But the fact that it is now too late to order anything from America or abroad for delivery before the big day doesn't really matter. The weakness of the pound means that anything spotted on a foreign website isn't much of a bargain at all once you put the figures into your currency converter and work out what it will really cost you.
So with an eye to any kind of good result, let's see what happened last week.
An overview of the currency markets for December 8th – December 14th
So let's get started where we always do, and take a look at how the pound fared when it went head to head with the US dollar. The week before saw the pound drop seven cents, and the closing exchange rate ended up on 1.4614. Could we drag that up at all and register even the slightest improvement this time around?
Well the Monday actually brought us a good result to start off the week in the right vein. By the end of the day we had managed to bring the exchange rate back up to 1.4858. That's quite a significant raise of nearly two and a half cents in a day – or a third of what we lost last week. In short, it was a good start, but could we build on it?
Let's find out.
Perhaps predictably the following day saw a slight decrease from our side of the fence, as the pound finished on 1.4737. But it was still very early in the week and we had three days remaining to see if we could change things and ensure that we had a good week overall.
Wednesday was better, and by the close of play on that day the pound had pushed back once more and claimed an exchange rate of 1.4801. If we could keep this up we might just be looking at a rather successful week. But could we actually pull it off?
Thursday seemed to indicate that things were indeed still going our way, as the US dollar struggled to make any mark. 1.4900 was the final figure for that day, giving us hope that we might just make an increase for the week as a whole. But could we hold on for another day?
As it happened we could. By the close of play on Friday night, the exchange rate had gone up a fraction more and closed on 1.4949. That meant we had gained some ground last week, and we had added 0.0335 to the value of the pound against the US dollar over the course of the week. We had gained back almost half of the losses of the week before, so we're hopeful that we might just gain back the rest next week too. We'll see.
Onto the Euro now, and you will remember from last week's report that the pound lost a total of five cents against the Euro the week before last. This was another significant drop, but since we had done so well against the US dollar, could we hope to rectify that drop and make back some ground here as well?
We were starting from a figure of 1.1539, but by the end of Monday we had managed to push things up slightly to 1.1559. It was a tiny increase, but as it turned out that was going to be the peak performance for the week.
On Tuesday we dropped back slightly to 1.1479, leaving us at a lower point than we had ended on the previous week. Did this mean we could expect to lose even more ground? It was a worrying thought but it did seem as if we could expect that to happen.
It was clear that we were going to have an uphill battle to regain any ground at all from here on in. Wednesday brought a further dip, and while we only dropped back to 1.1451 on the midweek point, it was still pointing to a Euro that was stronger than the pound at the moment.
But if we thought we might have seen the biggest drops of the week already, it turned out that we were wrong. That was reserved for Thursday, when the pound dropped even further to finish on 1.1275 for the day. This was turning into another week we would rather forget, and while the drop on Friday was not as pronounced, it still brought us lower to the closing rate of 1.1206 for the week.
That meant the pound had fallen by 0.0333 over the course of the week, and although that wasn't quite as bad as the week before the pound does seem to be in something of a freefall position against the Euro at the moment.
From there let's hurriedly leave Europe behind and see whether the pound could bag any better results in Hong Kong. The closing figure of 11.327 from the previous week indicated a loss of 0.558 against the Hong Kong dollar, and given the bad results so far this time around we might expect to lose even more. But would that turn out to be true, or could we pull a more unexpected result out of the bag?
In actual fact Monday did get us off to a good start. From 11.327 we actually made an improvement and were left at 11.516 by the end of the day. Now could we build on this and make it a memorable week for all the right reasons?
Tuesday seemed to indicate that things weren't going to go our way after all. By the close of play on that day we had finished on 11.422, losing 0.094 in the course of a day. But Wednesday boosted us up again, as we pushed back and found the energy from somewhere to claim a closing exchange rate of 11.471. Could we do better still and grab a good result to celebrate for the week?
Well things were certainly going in the right direction because by the time Thursday had come to a close we were looking at an exchange rate against the Hong Kong dollar of 11.547. The only question now was whether the final figure for the week was going to go in our favour, or in the way of the dollar.
And here at last was a battle that we actually won. Because by the time everyone went home for the weekend on Friday, the exchange rate had finished on 11.585. That meant we had gained a total of 0.258 over the course of the week – an increase that we really needed and certainly something to be grateful for.
So from here we travel on to New Zealand, to see whether we could expect any big gains or losses against the New Zealand dollar. We quite often see a sizeable change in the exchange rate against this particular currency, so it was going to be a nail biting moment to see what would happen this time around.
The previous week had ended with a loss of 0.0257 and a closing figure of 2.7712. What could we achieve from that point?
Monday gave us a big drop to contend with right at the start of the week, with 2.7384 as the closing amount. Not a good start – but as we know, the exchange rate against the New Zealand dollar can be quite interesting to watch, with big highs and lows at times.
We experienced another small drop the following day though, leaving us with a closing exchange rate of 2.7241. Was this going to be the overall trend for the week or would we see better results than this in the second half?
Well things continued on a small downward slide the next day as well, so it wasn't looking good for us. The closing figure for Wednesday was 2.7135, and when that slid even further down to 2.7049 on Thursday, it seemed as if this wasn't going to be
a good week to remember.
But then came Friday, and a somewhat surprising end to the week. By the end of the day, we were looking at an exchange rate which had jumped up to 2.7455. Overall we had still lost 0.0257 over the course of the week, but considering we were still losing ground for the first four days we should be grateful that we did manage to pull back some ground overall.
Our final stop for the week is as always Australia. The final figure for the previous week here was 2.2957, and by the time Monday had come to an end that figure was a distant memory. We had lost ground already and the exchange rate had slumped to 2.2398. Was this going to be another bad result in what had clearly become a bad week?
Tuesday cast doubt on that prediction, as we managed to improve slightly and bring the rate back up to 2.2495. Could we carry on like this?
Wednesday certainly seemed to indicate that the pound had the upper hand over the Australian dollar for the moment, as we grabbed another good result and finished on 2.2519. Thursday brought us down to earth a bit as we fell back to 2.2425, but we saved the bigger finish for Friday.
We finished on 2.2738 for the week, so although we had gained over the course of the week, that big drop on Monday could not be resolved and we lost a little over two cents in total.
This was clearly another week in which the British pound was struggling to maintain any kind of authority at all. Perhaps we will be glad to see the back of 2008 – although 2009 isn't shaping up to be very promising for the currency markets yet either.
Notable events in the world of currency
How weak is the pound – and how weak will it be soon?
We have all seen how badly the British pound is performing at the moment. But worryingly enough that isn't the topic of conversation in many circles. The big question is how much lower it will go, and although many think it is pretty much at rock bottom now, there is a chance it will go lower still in the weeks and months to come.
US dollar struggles badly against the Japanese yen
The US dollar nosedived against the yen last week, losing a lot of ground over the car industry worries.
From a starting point of 93.433, it finished on Friday at just 90.112. This is one currency that the US dollar is having a hard time against at the moment – proving that it's not always the strongest currency of the lot.
The Euro and the Pound – one on one?
There is an ever increasing possibility that one pound could soon be worth exactly one Euro.
While this is still a little way off, it is becoming increasingly possible that it could happen. Watch this space…
Information on currency exchange rates, figures, latest data and much more besides is contained on the aptly named site Exchange Rate. This includes an exchange rate calculator that you can use on your own website, which you can view at http://www.exchangerate.com/for_your_website.html.
So it's been a mixed bag of results for the pound, but on the whole the outlook is still looking gloomy. Come back next week to see whether we have been able to improve on things at all.
We'll see you then.
I couldn’t agree more with what you said about buying from abroad. I used to get odds and ends from the US for gifts and stuff throughout the year, but I haven’t even tried looking for the last few months.
Why bother when the exchange rate is this bad? The only time it’s worth doing anything like that is if America sells something you simply cannot find in this country. At least I’m helping the UK economy by buying British all the time this year! I worry about the long term damage that will be caused to the pound though.
I wouldn’t discount buying anything from the US no matter what the exchange rate might be. We can sometimes find cheaper goods over there even if the exchange rate isn’t that good. I’m commenting on this a year or so after the original article was written and the exchange rate is better, although still not anywhere near the $2 rate we did have a while back.
What I’m saying is not to discount anything until you have really thought about it. Don’t get too hung up on exchange rates because they don’t tell you the whole story.