A New Month Brings New Challenges for World Currencies
Posted by Allison on 8 September 2014, 13:05
Let’s not delay in finding out where the British pound stands on the markets after another week of trading. Let’s begin right now.
An overview of the currency markets for September 1st – September 5th 2014
This time we have the start of a month as well as a week to look at. The pound began on 1.6582 this time around against the US dollar, and promptly improved things to 1.6618 by Monday evening. It would not stay this positive for ever though – indeed it wouldn’t stay this positive for the remainder of the week. From this point on the exchange rate went in favour of the US dollar, partly because there was uncertainty over the future of the pound if the Scots were to vote for independence. By the time Friday night arrived the pound had fallen to 1.6296 – a shockingly low level.
Would we see a similar picture against the euro too? The week started with an exchange rate of 1.2573 against the pound, and this also improved on day one, rising to 1.2654 in the process. However we then saw a drop over the next two days, sending the pound back to 1.2522. It managed to claw some ground back the following day to close Thursday evening on 1.2607 before dropping back again on Friday to 1.2585 to finish the week. This was actually slightly better than we’d started off with.
Over in Hong Kong the pound started on 12.851 on Monday morning. Again the first day brought improvements – this time to 12.879. But from that moment on we followed the pattern we had seen against the US dollar. Here it meant we lost ground and ended up significantly lower on 12.629 by Friday night. Could this too be put down to the uncertainty over the use of the pound following prospective independence in Scotland? We shall see as time goes on.
As far as the New Zealand dollar was concerned the opening rate for the pound against it last week was 1.9806. The first two days brought improvements which finally made the pound settle on 1.9848 on Tuesday night. However after this there were drops in store every single day for the remainder of the week. This meant we finally ended up on 1.9650 by Friday evening – another significant loss for the pound here.
Would we see something similar in Australia too as the pound went head-to-head against the Australian dollar? We opened things on 1.7758 and again the first two days seemed to be going well, resulting in the pound finishing Tuesday night on 1.7810. By Friday night though we would be asking ourselves where it all went wrong. We were far weaker by then, recording an exchange rate of 1.7401 – a gap of some three and a half cents in all.
Notable events in the world of currency
Another slide against the Canadian dollar
We had more disappointment to come here, as the pound slipped from 1.7998 to 1.7727 across the week.
A slight improvement in store against the Swiss franc
Here we had some good news at least. The pound opened the week on 1.5165 and closed slightly higher on 1.5183.
Another drop against the Chinese yuan
Here we returned to a disappointing pattern. The pound dropped from 10.187 yuan to 10.007 by Friday night.
So it was not an encouraging week for the British pound. The uncertainty over the Scottish independence debate and upcoming referendum is certainly having an effect. It may well continue to do the same if a yes result comes back the morning after the vote itself. Until then we can expect to see further uncertainty in the exchange rates for the British pound.
It has certainly been difficult to pick out any really good results. This is especially the case when the bad results have been so marked and significant throughout the week. Perhaps we will have better news next week, but since that will be when the referendum takes place it is more likely there will be further uncertainty and falls in the value of the British pound.