Could The Pound’s Resurgence Be Short Lived?

Posted by Allison on 16 July 2009, 11:18

According to recent speculation it could well be.  The pound has had a rough year with big losses against the Euro and the US dollar in particular, as well as other currencies.  Now it has made back some gains in recent weeks it would seem disappointing that some people think it won’t last.

When we look at the performance of the pound of late, we tend to look at it in two portions.  There was the performance of last year, and then there was the performance of this year.  Things dropped steadily throughout 2008, and the pound that had once been able to claim two US dollars dropped back to the $1.50 region.  It then went even lower than that through the first part of 2009.  The lowest of the low came on the 24th January, when it limped home for the week after managing to claim just $1.3630.

But that was really the turning point, and since then we have seen it start the long road back up again.  But is the worst over?

If you read the news article that appeared on the Bloomberg website recently, you may not think so.  It might sound like doom and gloom (and let’s face it, it is) but it is well placed.  They are comparing the pound’s situation now to what happened back in the Seventies, and although we are now forty years further on it could be that the comparison is well placed.

Since the end of January we have been trying to make sure the pound gets back up above the $1.50 barrier.  It started to creep closer to it, claiming 1.40868 just a few short days after that low point was reached.  It got as close as 1.4934 on the 9th February, but it didn’t quite make it.  In actual fact it dipped back down to 1.4211 just three days later.

And it was still struggling a month later as it settled onto 1.3732.  But the highs and lows of the pound – evident to anyone with a currency calculator – were easy to see by even a novice.  On the 24th March it was bagging 1.4671 against the US dollar again.  Trying to keep up with all these ups and downs was getting to be hard work.

But to date it has yet to go back below $1.40 again.  And it finally soared above $1.50 on the 5th May, claiming 1.5129 on that day.  By the 22nd it was up to an unbelievable 1.5911 and the following week that had gone by the wayside in favour of a rate of 1.6150.

But the last day of June seemed to be the current peak.  It held a rate of 1.6587 at the close of play on that day, leaving us to think that the worst was over.  But since then it has struggled once more, and it is currently holding firm on 1.6103.

So perhaps the news story is right.  Perhaps we are not through the worst of it – although we would hope the exchange rate wouldn’t plummet as low as $1.3630 again.  Some people predicted a low of $1.25 though, so let’s hope they weren’t right.

We must just wait and see how things develop from here.  And fingers crossed it goes in our favour.



  1. I always thought the pound would go into a nosedive again. I’m probably pessimistic but it seemed too good to be true that we could start building it back up while the recession is in full swing still.

    It will be ages before it will build up again and stay that way. I think we could be looking at a pound that will struggle for a couple of years yet. I just hope it doesn’t mean the powers that be will see it as a great time to ditch it and go with the Euro. I’d hate it if that happened.

    — CDixon · Jul 28, 08:11 AM · #

  2. I happen to agree with CDixon. Maybe it IS pessimistic but it’s always been in the back of my mind that the pound wouldn’t just go right the way back to normal again.

    After having dropped so far down – particularly against the US dollar – I never thought it would head back up with no problems. So I was half expecting a bad patch to overcome the pound again, which is why reading this article didn’t fill me with any fear!

    It will get back to normal eventually, but I agree that we still have a long way to go before then.

    — Allison · Sep 1, 10:59 AM · #