We've had both good and bad weeks in the past as far as our currency exchange rate is concerned. But last week in this report we saw that a mixed bag of results is also very possible.
The good thing was that we didn't have any really atrocious results. The UK pound is still very fragile at the moment, and that means that we are constantly hoping for improvements from week to week. And when we do lose ground, it's better for us in the long run if that ground is only small.
As things stand overall there is not much to report in the way of good news. Worldwide the news is still focused very much on the recession and the effects it is having. Lots of countries are affected by what is going on and this very often impacts on the exchange rates.
For example, any currency that improves over the course of the week could well attribute that improvement to the decline of another currency. This is in a marked contrast to the initial currency actually making an improvement itself. It might seem like a small difference but it does actually change the way you look at things.
So how did things progress last week on the currency market? Did the pound pull back any ground against the US dollar? Did it get a good result against the Aussie dollar or the New Zealand dollar, where it can quite often do rather well? Let's see.
An overview of the currency markets for February 23rd – March 1st
We lost a couple of cents against the US dollar last time around. Given the situation we are in it could have been a lot worse, so perhaps we should take the smallest victories where we can. It left us clinging on to an exchange rate of 1.4291 though, and that isn't good if you are checking the numbers on your currency converter with the intention of having a holiday in the US anytime soon.
So with that in mind, let's take a look at what happened last week.
Well Monday's result was probably the last thing you were expecting to see. By the end of the first day of the week the exchange rate had fairly zoomed up to 1.4576. That represents an increase of nearly three whole cents over twenty four hours of trading. If this was the way the week was going to carry on, we could be looking at a very good result here.
But that was mere speculation and hope, and there were still four whole days of trading to go.
The situation meant that we were almost braced to see a fall the following day. But although that is what happened it turned out to be a very minor one. By the time Tuesday's trading came to a close we had slipped back marginally to 1.4508. That much we could cope with – but which direction would things go in now?
The following day marked the midweek point, and it seemed as if we could see exactly which way things would go. By the time the markets closed on Wednesday, we were left with a final figure of 1.4402. So we'd lost a cent on the previous day, and we were looking at a downhill run that was beginning to look rather well established. What would the rest of the week bring?
Once again Thursday brought another stage to this slide, as the exchange rate finished on 1.4340 for the day. The only thing left to ponder on now was whether the downhill run would carry on through the last day of the week, or whether we could pull something back as we closed on Friday.
The answer, unfortunately, did not go in our favour. Because by the time everyone headed home on Friday evening, the pound could claim just 1.4157 US dollars. We were dipping further away from the $1.50 mark that seemed unthinkable a while back – and there could be worse yet to come. We had lost only a little over a cent over the week as a whole, but it seemed worse than that because of the slide since Monday. Let's hope for better next week.
Moving on to Europe, we saw very little change against the Euro last week. We finished up on 1.1350 when all was said and done. But although that was a fair distance away from parity with the Euro, it still isn't far enough to feel comfortable.
We actually started the week quite well with a slight increase against the Euro. At the close of play on Monday the exchange rate had nudged up slightly to 1.1389. We couldn't hang onto that increase though, and by the time we moved ahead twenty four hours to the close of trading on Tuesday, we finished up on 1.1367. Still slightly ahead of the end point last week, but not boding well for the rest of this week.
Wednesday seemed to bear this out as we dropped below 1.13 to 1.1256. Another slight drop was registered on Thursday as we slid down to 1.1219. By this time the pattern as compared to the US was beginning to look rather familiar. We didn't see an increase there on Friday – and we weren't going to see one against the Euro either.
And in fact we dropped back below 1.12 as well. By the time everyone quit on Friday, the exchange rate was on 1.1196, registering a loss of around one and a half Eurocents compared to the week before.
Could we achieve something better in Hong Kong? Let's move across there now to find out.
Last time we lost 0.162 over the course of the week, leaving us on 11.081 in the end. Was there any room for improvement there? There certainly was – but whether we got it or not was a different matter.
Monday brought the same improvement that we had seen in the US and in Europe, bringing the pound up to 11.301. But we know what had happened there with a slow and steady slide from Tuesday onwards, so would we see that here too?
Tuesday brought disturbing evidence that this was indeed going to be the case. By the end of the day we were on 11.248 – and just twenty four hours later that had dropped still further to 11.167.
There was another drop on Thursday, as the Hong Kong dollar proved itself to be the stronger of the two currencies at the moment. The figure we were left with at the end of that day was 11.119. Not too much of a drop since the previous day, but enough to prove the pattern was in effect yet again. Was this going to be another big loss for the pound?
Friday confirmed that the pattern we'd seen elsewhere this week was also in place here in Hong Kong. The last exchange rate for the week was recorded as 10.978. That meant the total loss for the week here was 0.103. Not as much as we could have lost, but that overall slide from Tuesday onwards was certainly demoralising.
On to New Zealand now, where the final exchange rate of 2.8328 last week gave us an increase of eight cents overall. Did that mean we were in for a loss this week? The result from New Zealand can quite often be in contrast to the results we see elsewhere, so let's see what actually happened.
Well we got our traditional Monday increase here too last week, so we didn't break the pattern thus far. That gave us an exchange rate of 2.8436 at the beginning of the week. What would happen next?
This is where we finally managed to buck the trend, although not by an awful lot. At the close of play on Tuesday the exchange rate had gone up slightly to 2.8500. That was good news and it almost felt as if anything could happen from here on in, although unfortunately that added up to a loss. Wednesday finished on 2.7968, so it was anyone's guess as to what would happen next.
Thursday actually brought another increase, but it really couldn't have been much smaller than it actually was. The closing figure for that day was 2.7996 – leaving us wondering what on earth we should expect for Friday.
Luckily for us it was actually a good result.
By the end of the week, as everyone headed home after an active time between the UK pound and the New Zealand dollar, we were left with an exchange rate of 2.8300. That was an impressive and perhaps surprising increase for the final day of the week. In total though – and somewhat amazingly given the ups and downs we had seen – we had actually lost ground overall since the previous Friday. Only by a small amount (0.0028 in total) but even so it was a shame.
Our final stop is Australia, as per usual. Again, we had a great week the previous week, and the final rate that time was 2.2413. Could we now expect a week of ups and downs as we had seen in New Zealand (resulting in very little difference overall), or would we see an increase followed by a gradual slide as we had seen elsewhere?
You had the feeling that anything was possible, but let's see what actually happened.
Monday brought the almost inevitable increase to 2.2546, putting us slightly up from our starting position. The following day threw a slight decrease into the mix and landed us on 2.2504. Were we in for a week of slow decreases from then on?
In actual fact the answer was no – the following day brought a marked decrease that came as something of a surprise. Wednesday's closing exchange rate finished up on 2.2157. That is a loss of nearly three and a half cents in a single day. What could we expect to happen next?
A further drop the next day – although not quite as bad – almost seemed predictable. We ended up on 2.1979 on that occasion, and with just one day to go we were bracing ourselves for a further fall.
But in fact we increased our standing to 2.2271 – gaining nearly three cents overnight. That meant we had limited the damage we experienced last week in Australia to 0.0142.
So it wasn't a good week for the pound anywhere, and we can just hope that it will be followed by a week in which we make back some ground.
Notable events in the world of currency
Is the Turkish lira in trouble?
That is a headline you could use for many currencies at the moment. But the Turkish lira is currently featuring in news stories which are also using the dreaded word 'devaluation'.
We'll keep you posted if or when this actually does happen.
US dollar still looking strong
The US dollar still seems to be hanging on rather well in the current turbulent climate. It is performing well against many other major currencies, and doesn't look too troubled at all given the financial situation that we are coping with.
Hong Kong dollar takes upper hand against Euro
At the close of Monday's trading the Euro was bagging 9.922 Hong Kong dollars. But by Friday evening that had slid down to 9.805.
No doubt which currency was in the driving seat last week as far as these two were concerned.
The FairFX blog is worth reading if you like to keep up to date with the latest happenings in the world of currency exchange. You can see it by visiting http://www.fairfx.com/blog. In particular there is a lot of information about UK sterling and how well or badly it is faring at the moment, so it is good for UK investors and those with an interest in Forex.
So here we are at the end of another weekly report. It wasn't filled with good news as far as the UK pound was concerned, but perhaps we can hope for better news next time.
We'll let you know.