Posted by Allison on 17 May 2010, 14:29
Here we are again with another look at the currency markets and how the British pound fared against the various other world currencies. After the drama of the General Election and the ensuing result, would this mean the pound could do better during the closing days of the first week of the new government? Or would the fact that it was a coalition government lead to more uncertainty in the markets?
We’ve been keeping an eye on the exchange rates on the currency converter over the past few days, and we’ve got all the results and figures you need to get an idea of what happened. But before then let’s have a quick recap of how the week began, to see what kind of position we will be starting from.
As it turned out it was a very good start to the week as we managed to increase our standing against four out of the five main currencies. The only exception was the Aussie dollar, which saw the pound lose out on a small amount – 0.0006 in total.
Elsewhere it was a different story though. We managed to add on nearly a whole cent against the US dollar, and we added on roughly the same amount against the Euro as well. Elsewhere the British pound was better off by 0.071 against the Hong Kong dollar, and we also managed to grab an extra half a cent more with regard to the New Zealand dollar as well.
So where would this good start lead us to as the second half of the week got underway? Let’s find out now shall we?
So let us begin where we usually do, which is with the US dollar. Last time we finished on an exchange rate of 1.4771, so how would we progress through the second half of the week?
Wednesday certainly got us off to the right start, with a closing rate on that day of 1.4935. But could we continue going in this direction to get ourselves back over the $1.50 mark?
It may have been looking hopeful at that point but it didn’t continue. The following day saw the pound drop back to 1.4756 and it got even worse by Friday evening. Evidently the announcement of the new British government did nothing to assuage the losses the pound was set up for. By Friday night the exchange rate was on 1.4574 – making a total loss of nearly two cents over those last three days of the week.
So did this mean we were in store for a similar result against the Euro as well? Here we were starting from a rate of 1.1633, and by Wednesday evening that figure had changed to 1.1773, but we had seen a good result on Wednesday against the dollar as well. Would the same happen here too?
We saw a drop to 1.1723 the following day, and by Friday evening the figure had changed again – this time to 1.1667. It was lower, but we had still managed to gain a small amount over those three days as a whole. In total it added up to 0.0034.
Let’s move on to the Hong Kong dollar now, where the pound last claimed a total of 11.494. Once again there was a predictable pattern here that saw the pound climb to 11.621 on Wednesday. Was this as a result of the new government finally falling into place?
If it was, it didn’t last long. By Thursday evening the exchange rate had fallen back to 11.483, and it kept heading in the same direction for the last day of the week as well. By Friday night the pound had settled on 11.343 – making a total loss for those three days of 0.151.
Let’s see how we did against the New Zealand dollar now, as we start from a rate of 2.0620. One day later and that had changed to 2.0777, but as we know this could be setting us up for a fall later in the week.
Unfortunately this was exactly what happened. Just twenty four hours later we were down to 2.0562 and by the end of the week we were nursing another loss, with a rate of 2.0501 on the cards instead. In total we had lost out on just over a cent here, so it was another disappointing end to the week as a whole.
Finally we have one more currency to look at – and this was the one we had experienced a loss with earlier in the week. In fact the Aussie dollar was the only one to give us such a poor start. Could we turn the tables and have one good result here now?
The opening rate this time was 1.6519, and once again things started off in a predictable way. We were on 1.6650 by Wednesday evening, but by the time Thursday evening rolled around things had dropped to 1.6419. We knew where things were likely to end up by now, and on Friday evening we were proved right as the pound fell to 1.6351. A loss of over one and a half cents rounded off a disappointing end to the week here.
The Canadian currency went up from 1.0897 on Tuesday evening to a slightly better 1.0921 by the end of the week.
While the starting rate of 0.9744 led to a slightly higher rate midweek, by Friday night the Canadian dollar was down to 0.9735 against the US dollar.
From a rate of 0.7674 on Tuesday evening the Canadian dollar managed to increase its standing to 0.7793 by the end of the week.
While we now know the outcome of the UK General Election, it would appear that the coalition solution could have troubled those involved in the currency markets. This story from Reuters - shows that worries about the viability of a coalition government have led to a weak pound.
How long will it continue for though? We shall be back next time to see what the next few days are like. We’ll see you then.