Summary Of Currency Markets For February 9th – February 15th
Posted by Allison on 24 March 2009, 10:21
So here we are again after a couple of rather good weeks for the British pound. We have seen gains against most if not all of the main currencies on both previous occasions, so we are in an interesting position this week.
The question is whether this performance can carry on, and we have a feeling the answer will ultimately be in the negative. Why should this be? Quite simply, it's because the overall situation in the UK is not conducive to having a good exchange rate with all the other currencies on a long term basis. Unemployment is going up, the banks are struggling, the economy is struggling, and the UK recession doesn't look as if it will be leaving us anytime soon.
Of course the UK isn't the only country to be suffering in this way. But with an exchange rate that has gone down and down over the last year or so, we cannot expect things to get back to anything like normality for a long time yet. This is not pessimism; rather, it is realism. There is nothing we would enjoy more than seeing a healthier exchange rate when we glance at our currency converter and see how the pound is doing against other currencies.
But realistically it may be a while before we see a prolonged return to full health by the pound. Until then, we have to take each week as it comes.
So with that thought kept firmly in mind, let's see what last week brought to the currency markets as far as the pound was concerned.
An overview of the currency markets for February 9th – February 15th
So we have had two good weeks against the American dollar, and we were looking for a third. But did we get it?
Last week we gained over four cents against the US dollar, and ended on 1.4697 by the time everyone headed home on Friday evening. It wasn't inconceivable that we could actually get back into $1.50 territory this time around, but could we really do well enough to get three good weeks in a row?
Let's find out.
Well we certainly got pretty close to the $1.50 on the first day of the week. It seemed that the enthusiasm and strength of the pound was still very much in evidence on the Monday. By the end of the day the exchange rate had gone up to 1.4934. So near to that $1.50 mark again… and yet so very far. It was still a great increase for the first day though – but would it continue?
Tuesday didn't bring very good news as the exchange rate went back down again. By the close of play it was standing at 1.4783. That was a little disappointing after Monday's performance, but could it be that we would find some renewed strength again?
The midweek point didn't seem to foretell that. In fact it seemed as if the pound was keen on erasing all the good work of the previous two weeks. If we thought the decrease in value we saw on Tuesday was disappointing, the result we got on Wednesday was even worse. That was the day we ended up on 1.4375. We'd dipped far below what we had started on at the opening of the markets on Monday.
The pace had slowed on Thursday, but not enough to stave off another fall in the exchange rate. The figure we closed on against the US dollar was 1.4211, and barring some kind of miracle we weren't going to see a $1.50 figure this week, that was certain.
We did see something of a jump on Friday, but it wasn't enough to gain back everything we had lost over the course of the week. In the end the final figure was 1.4503. That meant we had lost nearly two cents since the previous week. It could have been worse but it also could have been so much better. The fabled $1.50 mark still seems such a long way away.
So let's move across the water now and see whether we could do better in Europe. We'd increased our standing against the Euro too the week before, when the final exchange rate was 1.1486. That had gained us three and a half Eurocents over the week, so could we improve on that or would we see a similar result to the one against the dollar?
Monday actually saw very little difference to begin with, leaving us on 1.1481 for the day. This was rather in contrast to the result we saw in the US, so that in itself was interesting to note.
The slight drop on that first day seemed to gain apace though as Tuesday came to a close. We were left on 1.1401 then, and that certainly made us start to wonder whether we could reverse this small but slightly worrying downward trend, or whether we were stuck with it.
Well the small decreases certainly gave way to something else on Wednesday. Unfortunately they gave way to a bigger drop, as all the ones combined to bring us down to 1.1111. Could we reverse things and do better in the second half of the week, or was this a downward slide we couldn't do much about?
The next slight drop on Thursday answered that question – at least for another day. By the close of play on that day we had slid a little further down to 1.1074. While the depths of parity were still a fair way off, it would be good to pull away from them again and finish with good news of some description.
And in fact that is what we managed to do. The currency markets closed for the weekend on Friday night with the British pound claiming 1.1310 Euros. That is a big leap up from where we stood just twenty four hours earlier, and although we were still down on the week before, we still managed to limit the damage to just 0.0176 Euros.
So once again, the difference between this week and the week before was just under two cents – just about the same amount as we had lost against the US dollar. The good thing is that if we were going to have a bad week, at least it wasn't looking as if it was going to be a hugely bad one.
Our journey to Hong Kong the previous week saw us finishing on 11.397, after a gain of 0.327 over the week. Could this week see another gain or would we be looking at a small loss once again? Somehow, after all the negative news we've had in previous weeks, even a small loss wouldn't be too bad to stomach.
So let's see what actually happened. The first day brought a good increase to start the week with, as the pound climbed up to claim 11.579 Hong Kong dollars. This was an encouraging start, but as we have seen elsewhere that doesn't mean you'll get a good finish.
And indeed we lost ground the very next day, as the pound dropped back to claim 11.460 Hong Kong dollars. The result on Wednesday saw an even more pronounced drop, as the figure we ended up with was 11.143. So was this going to start off a big slide that would take us through to the end of the week?
Well the drop we had on Thursday wasn't as big as the one we had the day before, but it still brought us down a little further to 11.016. The only question now was whether we would go up or down on the last day of the week. An improvement like we had already seen in Europe and in America would be good – and indeed it would set off a pattern that might just be repeated elsewhere too.
As it happened the final figure for the week was 11.243 – giving us the increase we were almost expecting. It also meant we hadn't lost quite as much overall as we would have done, although the losses still mounted up to 0.154.
New Zealand as always is our next stop. Last time we had enjoyed just a small increase of around two cents, although compared to the whopping increase of over nineteen cents the week before, it was tiny!
We were out of the blocks with a starting rate of 2.8352 this week. Could we get a good result here, or would we see a slight decrease as we had seen elsewhere?
Monday's result saw us heading downwards for the start of the week. An exchange rate of 2.7839 wasn't the result we had been hoping for, but as we had seen in other countries we'd headed downhill before going back up again in many cases.
Unfortunately the downward slide continued into Tuesday as well. By the time that day had closed and the markets had ended for the day, the exchange rate had gone down again – this time finishing on 2.7563. The slowdown abated slightly on the following day, as the currency grabbed 2.7436 New Zealand dollars per pound. Was this the start of the turnaround?
Thursday saw another decrease in the exchange rate but it was smaller still, leaving us on 2.7395 at the end of the day. Now according to the results seen elsewhere this was the point at which things turned around and we saw an increase to finish the week on.
And did this happen in New Zealand? Indeed it did – as we finished on 2.7512 for the week. Unfortunately it wasn't enough to erase a loss of over eight cents during the week as a whole, so this was the worst result so far in a week of losses.
Finally we head over to Australia, to see whether we could do any better there. It was distinctly possible that the pattern would continue here too, but it would be interesting to find out for sure.
The starting point was 2.2291, after losing around a cent the week before. And as it turned out Monday didn't bring much of a change – although what little it did bring was on a downhill slide. We finished on 2.2109 on that day.
Tuesday actually brought a tiny increase – just to buck the trend – although it was barely noticeable at 2.2118. The next day saw the pattern reasserting itself though, as we finished up on 2.1938. Would it really be downhill from here on in?
As it happened the answer was no! Ever unpredictable, the result for the next day was 2.1975 – only a tiny increase but there all the same. And with a closing rate for the week of 2.1946, it was clear this was a real up and down week. That meant we had lost a total of nearly three and a half cents over the week as a whole. That added to our losses, but we get the feeling that overall it could have been a lot worse.
Notable events in the world of currency
Russian rouble brings interesting results with the pound
The Russian rouble has been the subject of much news recently, but the British pound is still unable to really capitalise on it.
The exchange rate of 53.632 roubles to the pound on Monday went down to 50.262 by Friday evening – telling us that perhaps the pound still has much to worry about.
US dollar wins against the Euro
The Euro and the US dollar both look good against the weaker pound, but which one won the head to head last week?
It was the US dollar – it enjoyed a steady climb from 0.7687 on Monday to 0.7798 on Friday evening. And it looks as if it could continue in the same vein for a while to come.
A quieter week overall?
After some dramatic results of late, it almost seemed like the week in question was something of an anti climax. There were no huge increases or decreases in the exchange rates last week, and many people breathed a sigh of relief at the welcomed change of pace.
The question is, how long will it last?
So we come to the end of another weekly report on the exchange markets. Will we be reporting on good or bad news next week, however? Make sure you come back to find out.
We'll see you then.