A Catastrophic Week for the British Pound
Posted by Allison on 12 October 2016, 13:38
Welcome back to a new report, and the latest news from the currency markets. As it turned out, the latest news was far from good for the British pound.
An overview of the currency markets for October 3rd – October 7th 2016
Here we are with a whole new month then. As October began, the British pound stood at 1.2962 against the US dollar. Unfortunately, the month would not begin in good fashion. Far from it, in fact – the entire week did not see a good exchange rate for the pound against the American currency. By the time the week was over, the pound had slid to 1.2329. Yes, you did read that right – there was a loss of over six cents in store for the pound last week. Speculation has it that talk of a hard Brexit may have led to the slip, but this is still being looked at.
So could the pound be in for a similar disaster against the euro as well? It began trading on 1.1614 here, and once again a quick glance at the week as a whole tells us the overall pattern – in fact, the entire pattern – is heading in a downward direction. The biggest drop by far came on Friday, so once again we ended the week in bad shape. This time the closing rate was 1.1067, which meant we had lost around five and a half cents against the euro across the entire week.
It soon became clear we were going to see this pattern again too. Moving on to the Hong Kong dollar, we noticed the opening rate was 10.051 for the pound. We cannot remember the last time we reported on a figure starting with a nine as opposed to a 10. But here it was – another five days of losses that saw the pound drop to a nine in the exchange rates as early as Tuesday. By Friday, we were down to 9.5653.
So where would we go against the New Zealand dollar? Our opening rate here was 1.7849 and we had two poor days to start things off, much as we had expected. However, we did then have two better days – the first time this week we can report on such a thing. This meant Tuesday’s closing rate of 1.7508 was returned to 1.7715 by Thursday night. However, Friday was nothing short of a disaster, and this led the pound to drop down to 1.7254 all in all.
The same pattern was then played out against the Australian dollar. Here, we opened proceedings on 1.7022 before dropping to 1.6636 just two days into the week. By Thursday, we had edged back up to 1.6713 but as we now know, there was nothing much to celebrate after that. Friday night closed with the pound scrabbling to achieve 1.6265.
Notable events in the world of currency
More of the same against the Canadian dollar
Here too we had a bad result, dropping from 1.7060 to just 1.6362 across the week as a whole.
Another drop against the Swiss franc
Here we saw just one slight improvement across the entire week. However, it was not enough to stall the British pound from falling from its opening rate of 1.2631 to just 1.2114 across the week.
More bad news against the Icelandic krona as well
Here too things were far from good. We began trading on 148.303 and finished the day on just 140.443.
So we had some really bad news to contend with this week. This was perhaps the worst week we have seen since the Brexit vote became clear. However, it may be nothing but uncertainty over the negotiations that has caused the drop in value for the pound to occur. Perhaps as things become clearer the pound might take advantage of it. On the other hand, things could be about to get even worse. Suffice to say, we will be here to report on every single movement as the year goes into its final three months.