Posted by Allison on 5 January 2010, 15:51
So here we are at the end of another year. This report will see the currency markets last few days of 2009, and while the date goes up to the 3rd January the markets do not open until the 4th. So next week we will report on the first few days of trading for the New Year. How will the British pound fare as we head from one year into the next?
We’ll start by recapping the previous week – Christmas week – which saw four days of trading on the currency markets. Unfortunately for the pound the numbers on the currency converter were not the ones we would have wanted to see. Instead we were left with some quite poor figures to close out the festive season with, as you can see below.
We lost a little less than two cents against the US dollar for starters, and the picture was not much better against the Euro. In fact the losses for the pound there were very similar to the ones we saw against the US dollar.
The pound also managed to drop a total of 0.144 against the Hong Kong dollar, which didn’t give us any confidence that we would achieve better results elsewhere either. And indeed that proved to be the case, as we lost ground against both the New Zealand dollar and the Australian dollar as well. In the case of the former currency we lost 0.0167, and in the case of the latter we lost 0.0126.
So that was the picture as we headed into the Christmas break. What would happen in that strange land that exists between the Christmas break and the start of the New Year?
Let’s find out now as we head into that period of time. Could the pound end the year on a better note, or would we end on a poor one?
The close of the previous week against the US dollar saw the pound claiming an exchange rate of 1.5983. And when the markets returned on the following Monday there was very little difference in that rate by the end of the day. The pound dropped back slightly but the difference was thankfully only very slight. The closing exchange rate was 1.5980 – a small difference of just 0.0003. Could we keep the changes this small if they were going to be bad ones, or would they eventually go in our favour?
The 29th December gave us another result which seemed to bear this idea out. We saw another small change in the exchange rate but this one did go in our favour. By the time the day was over we were on 1.5988. It was only 0.0008 more than the day before, but seeing as it was a raise it was good enough for us. We were looking for any tiny advantage that we could get.
But as the year started to draw to a close the 30th December saw a change that wasn’t what we wanted to see. All the changes we had seen so far this week were tiny ones, and yet the 30th produced something rather different. The closing rate on that day was recorded as 1.5860. This was a difference of more than a cent against the American dollar, so we had lost out on any minor gains we had managed the day before.
So we were now down to the final day of the year – New Year’s Eve. There would be no trading on New Year’s Day so we will now see whether we could end the year on a better note. And indeed we achieved something of a leap ahead on Thursday evening, as the pound jumped up to 1.6221 against the US dollar. This represented a gain of 0.0238 over the shortened week as a whole.
And just as an added extra for this report, let’s see how the pound ended 2009 compared to how it started the year. Back in January 2009 it was claiming an exchange rate of 1.4611 – so over the course of the year it has added on a total of just over sixteen cents. All in all it was a successful year for the pound.
So let’s move on and check the stats for the same period for the pound against the Euro now. Last week we left it on 1.1101 after losing nearly two Euro cents, so what could we do this time around?
The first day did not give us too much in the way of hope as we ended up falling back to 1.1093. But as with the pattern against the US dollar we did lose just a tiny amount so it could have been a lot worse.
Things fell back a little more the next day though, and as we have seen before all those little losses can add up to a large one by the end of the week. So a figure of 1.1077 on Tuesday evening did not exactly fill us with confidence. And once again it was a similar tale on the 30th, as we slipped down again – this time to 1.1061.
Now on New Year’s Eve we had managed to achieve quite a leap forwards against the US dollar. The question now was whether we could do the same again when it came to the Euro. We could certainly do with a satisfying increase against the Euro, but whether or not we could end what has been a sometimes turbulent year in such a fashion remained to be seen.
But as everyone got ready to bid farewell to 2009 and welcome in 2010, we achieved what some might have thought was impossible. In the end we said goodbye to a dramatic 2009 with an equally dramatic turnaround at the last moment. The British pound managed to drag itself to a better rate of 1.1259 to close out the last day of the year. Now that gives us hope that 2010 will have something better in store, doesn’t it? And overall we added on 0.0158 over the week.
But where did the pound start the year against the Euro? Had we done well over the course of 2009, or had we lost ground? In fact the pound started off on the 1st January 2009 on 1.0498, so we had increased our standing during 2009 by a healthy seven and a half cents.
Let’s move on to Hong Kong now to see whether we could end the year on a similarly healthy note there. Last week we finished up before the Christmas break with an exchange rate of 12.393. This was after a loss of 0.144 over the shortened week as a whole.
As the markets re-opened after the seasonal break we saw only a very slight change on Monday. At the close of play on that day we were left on 12.392, so while the change was small it didn’t go to the advantage of the pound. We managed something better on Tuesday though as the pound rallied to close on 12.400.
So just two days remained now until we saw the New Year in, and which way would things go next? Would the pound manage to pull off another last minute jump up as it had against the US dollar and the Euro? Or would there be something altogether different in store?
There was certainly some bad news to come on the 30th as the pound dropped the ball and fell back to 12.299. That good result from the previous day had been wiped out very quickly indeed. Where would we end up as the year finally came to an end?
The answer was in fact in a good position. The pound repeated the feat it had achieved against the US dollar and the Euro and finished up on 12.578 against the Hong Kong dollar as we bid farewell to 2009. And since we were on 11.323 back on the 1st January 2009, you can see that we have added on 1.255 during the whole of the year. The pound has certainly fought back hard during 2009.
Now we have the territory of the New Zealand dollar and the Australian dollar to contend with. These are interesting currencies because they tend to mirror each other a lot. If the pound does well against one of them it will tend to do well against the other also. And the opposite is also true – there have been several weeks recently where the pound has had a disastrous time against the New Zealand dollar, and has gone on to record a similar defeat against the Australian dollar as well.
So would this final shortened week of 2009 be a good one or a bad one to that effect? Would the pound be able to take on both of these currencies and win this time around, or would we be leaving ourselves open to some serious work to do as the New Year kicks in?
Let’s start in New Zealand, where the closing exchange rate last time was 2.2636 on Christmas Eve. Could we improve on that or would we be struggling to keep up?
Well we didn’t get off on the right foot for sure, because we finished up on the lower exchange rate of 2.2533 by the time Monday was done and over with. But with that knowledge that the pound had enjoyed a good final surge into the New Year with three other major currencies, perhaps it was a little early to worry unduly at this point.
Unfortunately by the time another twenty four hours had passed we were suffering with a much lower exchange rate than we could have imagined. Unbelievably it was pegged at 2.2218 – representing a loss of over three cents overnight. Could we ever hope to add that back on?
It certainly didn’t happen the next day because we finished up on 2.2089 – wiping out more than another cent in the process. We did manage to achieve the same feat on New Year’s Eve as we had against the other currencies (pushing the final exchange rate for the year up to 2.2298 against the New Zealand dollar). But because of the losses experienced earlier in the week we didn’t benefit from it as well as we might have done. Overall we lost nearly three and a half cents since the week before.
But we have a very different picture over the whole of the year as well. Back on the 1st January 2009 the pound was claiming 2.5397 against the New Zealand dollar. So during the year we have lost a total of virtually thirty one cents. Not a good result at all.
Finally it is the turn of the Australian dollar, where we bagged an exchange rate of 1.8088 last week. Could we better ourselves here or would that result mirror what we had seen in New Zealand?
Monday 28th saw a drop to kick off the week with, as the pound fell back to 1.7995. We were starting on the back foot then, and things didn’t get any better the next day as we found ourselves struggling to achieve 1.7801. Where would we head to next?
The answer was the even lower position of 1.7738, which meant we were in a poor position even if we did manage to better ourselves on the last day of the year. We did indeed manage that, and ended the year with an exchange rate against the Aussie dollar of 1.8025. So here at least the total losses for the week were far less than they had been in New Zealand; just over half a cent was the extent of the losses experienced here.
And overall the year was very similar to that which had been experienced against the Kiwi dollar. On 1st January 2009 the pound was worth 2.1285 Aussie dollars, so we had lost out on more than thirty two cents over the year as a whole.
That last minute jump up for the pound occurred against the Canadian dollar as well as several other currencies. The pound went from 1.6709 at the start of the week to 1.7034 at the end of it.
The US dollar had a rather more interesting time as it fell from its starting point of 1.0454 to 1.0392 on the 29th. It then picked up to finish the year on a healthier 1.0501.
It was clearly not the best week for Canada and its national currency as the Swiss franc grabbed a better exchange rate against the currency as well. From a starting position of 1.0114 it dipped down to 1.0078 before finally finishing the week – and the year – on 1.0196.
There could be no better article to read as we kick off a fresh New Year than this one by the Financial Times website. Could the pound be in for another rough ride during 2010?
So that’s it for our round up of the currency markets for 2009. We will be back next week with a fresh new look at the first trading week of 2010, so make sure you are back to read about how those first days panned out.
Happy New Year!