A Tough Week for a Pre-Election Pound
Posted by Allison on 13 April 2015, 12:12
Welcome back to another report, which takes in the second short Easter week following the Easter break. Let’s see what happened.
An overview of the currency markets for April 6th – April 10th 2015
Here we go then with another busy week on the currency markets. The British pound began this particular week on 1.4803 and of course since Monday was Easter Monday there was no trading. It had a good day to start things off on Tuesday though, rising to 1.4887 as a result. Things were better still on Wednesday as the pound improved further to 1.4953. However if we thought this looked good for the rest of the week we were wrong. In fact we couldn’t have been more wrong if we had tried. By the time Friday night arrived and trading was over for the shortened week, we ended up on 1.4591 – significantly lower than we were expecting.
Could we expect something as disastrous against the euro as well? On Tuesday morning the pound began the shorter week on 1.3668. The first two days were rather encouraging, as the pound climbed to 1.3766 by Wednesday. We then had a drop on Thursday to 1.3758, so did this mean we would get another bad slide on the last day? Actually nothing could be further from the truth here. The pound shot back with a good response by closing the week out on 1.3804 – the highest rate it had achieved all week.
This meant we really had no idea what to expect against the Hong Kong dollar. Would it follow the same pattern seen against the US dollar though? The pound opened on 11.475 before enjoying two great days against the dollar. This meant it finished on 11.579 on Wednesday night. However our worries turned out to be well-founded when the pound then went into virtual freefall for the final two days of the week. By Friday night it was worth 11.308 – again, significantly lower than it had started with on Tuesday morning.
Now we are onto the two currencies where you never quite know what will happen. The pound opened on 1.9818 and instantly dropped in value against the New Zealand dollar, falling to 1.9795 by Tuesday evening. Unfortunately if we thought the pound had done badly against other currencies we hadn’t seen anything yet. The performance here was so bad the pound failed to have one good day. Instead it limped home on Friday night on a mere 1.9407.
Would it do just as badly against the Australian dollar though? We would actually love to say the pattern was the same, but in fact it was worse. The opening rate of 1.9604 had dwindled away to just 1.9083 by Friday evening. This equates to a loss of over five cents in just four days. That’s disappointing to say the least.
Notable events in the world of currency
A predictable drop against the Canadian dollar
Here too the pound fell markedly, falling from 1.8716 to 1.8478 by Friday evening.
Better news against the Swiss franc though
At least here we have something good to report. From a starting rate of 1.4215 the Swiss franc improved to 1.4342 by Friday night.
Relief against the Icelandic krona too
There were some good results to be found, but you had to go a way to find them. Here the pound managed to rise from 201.382 to 202.502 on Friday evening.
So we can see it was far from being a great week for the British pound. The election is getting much closer now and the markets don’t tend to like the uncertainty that can go along with them. This means the pound might well struggle for the next three weeks or so while we approach the big polling day. Maybe after that it will start to do better, but then that would depend on what the result is. So perhaps we should expect a rough ride for the foreseeable future for the British pound.