Posted by Allison on 24 March 2009, 09:52
Last week's figures were notable for just one thing as far as the British pound was concerned – they brought nothing but bad news for our currency as the ever worsening situation of the economy had a marked effect on the exchange rates. No matter which figures you typed into your currency converter, it was clear that the pound was coming out the worst of virtually every currency you held it up against.
Experts thought that this was going to be a pattern which would continue – and possibly get worse – before it got better, but we shall see whether they are right or not (at least in the short term).
So let's take a look and see whether the pound could muster any strength at all last week, or whether those experts got it right.
We already know that the British pound has been by far the weaker currency when put up against the US dollar of late, so has that pattern continued for another week?
The previous week saw the pound claiming just 1.8589 US dollars for every pound exchanged – well down on the two dollar exchange rate of just a few short weeks before. Last week started with a slight dip down to 1.8537, but not enough of a change to really glean any information on what could happen for the rest of the week.
But if we needed a bigger sign, there's no doubt that we got it on Tuesday – and it looked as if the experts were going to be proved right. The exchange rate against the US dollar dropped to 1.8355, meaning we had fresh worries to think about and the possibility of an even lower exchange rate still to come.
The pound is nothing if not robust though, and it managed a slight comeback (if you can indeed call it that) by fighting back to a rate of 1.8465 the very next day. The only question now was whether it could continue an uphill fight, or retreat in to submission and sink even lower again.
1.8355 was the figure that gave us our answer. That was recorded at the close of play on Thursday, and it pointed towards a further slide in how many US dollars you could expect to get for your money if you were planning to go on holiday there any time soon. Even if we could see a rise in the pound's fortunes by the time the week ended, there was no real reality that it was going to be a big leap, and judging by the evidence we had already seen, it was even more unlikely that there would be any difference at all.
And as it happened, by the end of the week we were looking at 1.8304 – a difference of 0.0285 in just a single week, and another drop from the figure we were facing on Thursday.
So where are things going to go from here? If you believe the experts you would say that the only way is down, and from the evidence we have seen over the last few weeks, that has to be the most likely route. It seems hard at the moment to believe that the pound is going to improve markedly for quite some time to come.
Things were a little closer between the pound and the Euro when we last looked at them, but there was no mistaking the fact that the Euro was coming out on top, even if not by much.
At the close of play on the previous week, the pound could claim 1.2553 Euros. Monday was a Bank Holiday, which ironically was probably the best chance of the pound staying stable against the currency, seeing as there was no trading on that day.
The pound closed slightly up on the Euro on Tuesday though at 1.2573, although you would be forgiven for not feeling too encouraged by this, seeing as the general trend of late has been down. It has got to the stage where you almost expect to see a lower exchange rate than we claimed the day before, and any rise at all – even the tiniest percentage point – seems like a great victory.
Wednesday closed with an exchange rate of 1.2504, a small drop on the day before and setting us up for that familiar feeling of a lowering of the exchange rates through the rest of the week. Would that feeling be turned into reality?
Unfortunately it would. Thursday saw a closing figure which took us into 1.24 territory, finishing at 1.2426. And any hope of an improvement by the end of the week was in vain as the final figure we ended up with on Friday was 1.2422. The loss over the course of the week was 0.0131 – not a great amount all in all, but another sign that the continuing trend for the British pound at the moment is very much in a downward direction. We can only expect more of the same next week at present, as it seems as if any promise of a recovery is simply too far off to be of use at the moment.
As always in our weekly look at the currency markets, we leave Europe behind at this stage and head off to Hong Kong, where the British pound was claiming 14.512 Hong Kong dollars as the previous week ended. Would we see another lowering of the figures this time, or would there finally be something good to report?
The picture didn't start off well on Monday, as the day ended with the Hong Kong dollar exerting its authority over the pound once again, and raising the ante to 14.477. This was clearly going to be another tough fight for the pound, and it didn't look as if it had much fight in it at all at the moment.
This was proved only the very next day, when we were suddenly looking at a figure of 14.331. The ups and downs against the Hong Kong dollar are well documented in our weekly round up of currency news, but it didn't look as if there would be many 'ups' to report this time around.
Fortunately Wednesday's closing figure proved us wrong, when a leap up to 14.417 gave us at least one thing to celebrate. Unfortunately it was very much a case of having to celebrate quickly, because the very next day we were back down to 14.331 again – and there was worse news to come.
Friday ended on an even lower note, with the pound only managing to claim 14.289 against the Hong Kong dollar. That means we lost further ground last week which added up to a loss of 0.223 over the course of the week – another loss to add to the ones we have racked up recently. Is there any end in sight to the doldrums the pound is clearly in at the moment? Only time will tell.
New Zealand is next up on our global trip with the British pound, and it would have been nice to have at least some small piece of promising (if not good) news to end the week with. What could we manage, I wonder?
The pound ended by claiming 2.6088 New Zealand dollars per pound last week, and with nothing to celebrate elsewhere even the smallest rise would be wonderful. Monday's closing exchange rate was 2.6157 so that was a good start to the week – could we do even better in the days to come?
Well as it happened Tuesday would probably be one of the best pieces of news to hang onto for the whole week. The pound managed to up the ante once more and positively soar to an impressive 2.6509 by the end of the day – that's a rise of 0.0352 in just twenty four hours.
But the following day it turned out that our celebrations would be short lived, as the New Zealand dollar sought to redress the balance somewhat and we finished up trading by looking at an exchange rate of 2.6297. Were we going to be punished for soaring to such a high on the previous day?
The answer, in short, was yes. 2.6044 was the figure that finished off the day – and finished off any hope that the pound could at least come out on top as far as the exchange rate with the New Zealand dollar was concerned. From there it was almost as if the pound gave up altogether, because the final exchange rate that was in place by the end of the week was 2.5950 – which is 0.0138 down on last week and rather crushing considering the result it managed to snag on Tuesday.
So how did things go in Australia? By now it was almost as if we were all expecting bad news, so we clung on to the hope that last week's closing rate of 2.1365 wouldn't get any worse. The pound was desperately looking for any port in a storm by now, yet there seemed to be nothing on the horizon except for more dark clouds.
Monday brought news that the pound was fairly stable, ending by claiming 2.1367 Australian dollars to the pound. Tuesday was similarly as encouraging in Australia as it had been in New Zealand, with the pound reaching up to 2.1526 by the end of the day.
But it was almost as if the Australian dollar was taking note of what was going on in New Zealand, because a very similar pattern kicked into play. Wednesday brought a closing rate of 2.1400 into play, leaving us wondering if this was the start of another slide in our fortunes.
And it was. Thursday ended on 2.1181 and it seemed as if the British pound could do no right at all. It clawed back a little ground and finished on 2.1200 on Friday, but that was little consolation all in all.
So it was clearly another week of doom and gloom for the pound, and there seems to be no way out at the moment. Would this continue for the foreseeable future as the experts are predicting? We'll just have to wait and see.
8.2% - that was just how much of a slump we saw in our currency during the month of August when it went up against the US dollar.
It remains to be seen how much further this slump can go, but it's not likely to be good news.
While many countries are seeing their exchange rates against the British pound rising, there has been something of a tussle between the US and Canadian dollars over the past week.
The US dollar has been claiming between 1.04 and 1.05 Canadian dollars from day to day, and with both currencies doing reasonably well at the moment it will be interesting to see what happens next.
After a disastrous performance earlier in the year, it seems as though the US dollar is now one of the strongest currencies around, for the moment at least.
With talk of recession still going on in Europe, it seems ever more likely that the US dollar will continue to maintain its current strength, leaving behind the woes of just a few months ago.
The website Interactive Investor – www.iii.co.uk – is a good one to go to if you want more than just standard currency news. This site has plenty to offer on all matters relating to money, so check it out to see what it has to offer.
It seems as if the next few weeks at least (and probably, in all honesty, a lot longer than that) have nothing to offer but bad news in terms of the state of the British pound. With the situation regarding the economy and the ever impending recession that is likely to overcome us soon, it seems as if we are going to be in the doldrums for some time yet.
We'll see you again next week for the latest in currency news, no matter whether it's good or bad.