Another Hard Knocks Week for the British Pound
Posted by Allison on 11 July 2016, 14:52
So here we are with another look at the consequences of Brexit for the currency markets, and in particular for the British pound. It’s not all bad, but it has definitely dropped markedly in value.
An overview of the currency markets for July 4th – July 8th 2016
Here we are then with a fresh week, and it is a week that sees the British pound dealing with more of the fallout from the Brexit vote. It began the week trading on 1.3282 against the US dollar, before dipping slightly to 1.3274 on Monday night. The next couple of days brought more falls as well, this time taking the pound to 1.2976 by Wednesday evening. We did get better news on Thursday with a closing rate of 1.3022, but Friday knocked that out of the way and took us back to 1.2986 at the close of trading for the week.
Over to the euro now, where the British pound started trading on 1.1928 this week. While Monday only brought a slight dip to 1.1918, Tuesday brought forth a much starker drop – this time to 1.1765. However, we can pick out some good news here, because while the remaining trading days saw some ups and downs, the rate settled down overall. This meant we closed the week on 1.1731.
It didn’t look as though we were going to get a promising week against the Hong Kong dollar though. This saw us beginning on 10.305 before we had three days of drops in a row. So of course, by Wednesday evening we ended up on 10.068. We did manage a better performance on Thursday that took us to 10.103, but we couldn’t maintain that for just one more day. Instead, we dipped to close out Friday night on 10.073.
While it is always nice to have some improvements in some areas, this was not to be the case against the New Zealand dollar. We began trading on 1.8499 here and lost almost a cent on day one, dropping to 1.8416 in the process. There were bigger drops in store though, and indeed, once the week was over, we ended up with a raft of losses to add up. There was not a single day with good news of any sort. This meant the overall finishing rate was a disappointing 1.7856.
Finally, we move on to see whether the pound would have a similar performance in store against the Australian dollar as well. We could not manage a single good day here, starting on 1.7754 and dropping steadily throughout the week. This meant we reached a low point of 1.7281 by Friday evening. A big disappointment indeed, but perhaps to be expected given the impact of Brexit at the moment.
Notable events in the world of currency
A drop in value again where the Canadian dollar is concerned
Here too we managed to drop in value from 1.7165 to 1.6899 this week. This was a poor result and one we hoped we could reverse somewhat in the coming weeks. Only time will give us the answer to that one.
A smaller drop against the Swiss franc
The drops here have been noticeably smaller than has been the case in some other quarters. Here we have a starting rate of 1.2924 for the week, which ended up dropping to 1.2734 this time around.
More of the same against the Icelandic krona
We were not expecting rises anywhere this week, so it was no surprise to see another drop here as well. The pound started trading on 162.557 before falling back to 159.836.
So there we have it – another tough week for the British pound. We can expect more of this to come as the dust settles after the vote, and in particular the outcome of the vote. Will a new Prime Minister deliver better strength and confidence in the UK and the pound? Time will give us the answer to that particular question.