Posted by Allison on 5 October 2009, 14:37
Here we are again with the next in our series of currency reports, in which we take a look at how the British pound fared up against a number of other major world currencies.
Last time we saw that the pound had experienced what amounted to a bad week for anyone wanting a foreign holiday. Significant drops against the US dollar, the Euro and other currencies too made for disappointing viewing on the currency converter. But did that mean we could hope for better this time around?
We’ll have to wait and see, but we should at least think that bad news for some equates to good news for others. And as far as a weaker British pound is concerned, we should remember that this is helpful for exports at least. People abroad can get more for their money when the pound is low than they would be able to if it was at a higher rate. So not all bad news is actually bad news!
Perhaps we should keep this in mind this week as we see how things went over the past five trading days. Will the pound have bounced back and represent a much better value for travellers as opposed to the pound we saw just a week before? Or will it swing towards the business owners who are seeking to have a better business and a more competitive one for people abroad?
Let’s find out right now, as we take a look at what actually happened.
So let’s start with the US dollar as per usual, and see whether we could put in a better performance than we did the week before. Last time we lost a massive three and a half cents, which was bad news to say the least. Could we put any of that back on this time around?
Our final figure last time was 1.6333, so we were hoping to at least get back to something approaching 1.6500. Could we do it?
A good start was definitely hoped for, but unfortunately we started off the week in a very bad position indeed. By the time the markets closed on Monday evening we were looking at an exchange rate of just 1.6168. What was happening here? Was the pound going into freefall? We had already lost over a cent and a half, and here we were just one day into the five days of trading we had to come. Could we assume things would get better – or not?
Let’s move on to Tuesday and find out. Thankfully things did start to perk up here, and the final exchange rate for the day turned out to be 1.6336. That was over a cent and a half back up again, so we were headed back in the right direction. What else could we possibly achieve in the remaining three days of the week?
Wednesday kept on heading the right way as well, because by the close of play the British pound had managed to add on another cent. That pushed the exchange rate against the US dollar back up to 1.6436. So the midweek point was a good one – especially since it was higher than the final exchange rate we snagged the week before.
The only question now was what we could do with the rest of the week. There were just two days left and given the performance so far, things really could go either way. Unfortunately they didn’t head the right way on Thursday, which was when we finished up on 1.6216. After a drop like that it was clearly a worry as to whether we could finish up on a high note – we were certainly giving ourselves a lot of work to do.
And indeed that turned out to be the case – we had left ourselves with too much to do to make it through the week successfully. Our final exchange rate with the US dollar was a disappointing 1.5967. That meant we had lost out on over three and a half cents – extending our losses for another week.
Moving swiftly on in the hope of finding a better result elsewhere, let’s take a look at how the pound did against the Euro. We had dropped nearly three and a half cents there last time, leaving us on 1.1107 at the start of this week. Were we about to see another disappointing run here, as we had against the US dollar? Or could we summon up a better result?
The initial exchange rate we claimed at the end of the day on Monday took us in a similar direction to the one we had gone in against the dollar. By the close of play we were standing slightly lower on 1.1030. Not quite a Euro cent lower, but close enough. What would happen next?
We rallied on Tuesday though, which at least was good news. By the close of play we had managed to step things up and claim an exchange rate of 1.1053. It wasn’t much higher, but it was a step in the right direction.
We also managed to consolidate that the following day, finishing the midweek point with a rate of 1.1118. These were mostly good steps, and overall they had led to a marginally better exchange rate now than we had seen first thing on Monday.
But when the pound had gone up against the US dollar we had seen a slide occur during the second half of the week. Would we now see exactly the same thing happen with the Euro? And if we did, how far would that slide take us? Could we possibly end up with another disastrous result here too?
Let’s find out what actually happened. The telltale slip did indeed start on the Thursday, and by the end of the day we were staring at an exchange rate of 1.0981. Was there another slip waiting for us on Friday as well?
Indeed there was, and we finished up on a lowly 1.0884 against the Euro by the time the week was out. That meant we had lost a total of 0.0223, giving us the second of two bad results so far – at least as far as the tourists were concerned.
Our next stop on the tour of the world currencies is Hong Kong, where their dollar came out on top last time around. A loss of 0.284 was experienced by the British pound last week, which left us on 12.658 at the week’s end. So far we have two losses out of two – was this going to make it three out of three?
Perhaps predictably now, we saw our first loss of the week by the time the markets closed on Monday evening. By that stage the British pound had dropped to claim a lower exchange rate of 12.531. Would this set a similar pattern to the one we had already seen elsewhere? This was certainly starting to feel quite familiar, but we may just be proved wrong as yet.
Tuesday saw things perk up a little, with the Hong Kong dollar proving to be the weaker of the two and settling on 12.661 against the British pound by the close of the day. The pound asserted its authority again the following day, as we managed to make a stand on 12.739. But we know now that the second half of the week was proving to be a troublesome one for the pound, and despite those increases we couldn’t automatically expect a good result for the remaining two days.
And indeed that was the case. On Thursday the pound dropped back to 12.568 – quite a significant drop of 0.171 in just a single day. But there was worse to come as the pound fell further to 12.375 to close out the week. That meant we had made another loss here in Hong Kong – a loss totalling 0.283 all in all. Here’s hoping we could improve on that in the very near future.
So on to New Zealand now, where the previous week had seen a fall to 2.3001 after losing out on six and a half cents. Given the results we had seen elsewhere, could we reasonably hope for anything better here? It didn’t seem like it initially, but let’s see what actually happened.
And indeed Monday set us off to a bad start with a small decrease to 2.2975. Small it may have been, but it was enough to make us wonder whether there were more drops on the way.
And indeed there were, as Tuesday set us up with a bigger drop to 2.2641. Even though we managed to up things marginally to 2.2646 the following day, it wasn’t enough to make us feel positive about where the rest of the week might lead us.
And evidently we were right not to feel too enthusiastic as it was clear the New Zealand dollar had more in store for the beleaguered pound. By the time Thursday was over and done with, the pound was standing on a mere 2.2391 New Zealand dollars. What could possibly happen on the one remaining day of the week?
There was another drop in store as things turned out, although it was a much smaller one. At the close of play on Friday the British pound was claiming just 2.2271 New Zealand dollars. That meant we had lost an overwhelming 0.0730 cents in a single week. So we had actually lost more than we had the week before. Where would these huge drops end?
Finally – and with four losses under our belt so far – we move on to Australia. It seemed too much to hope for that we could make an increase here; it was more a question of how much we would lose, not whether or not we would lose.
Five and a half cents were lost the week before, leaving us on a starting point of 1.8809 this time. But by the close of Monday’s trading that had already diminished to 1.8770. Another drop was in store on Tuesday, as we finished up on 1.8704 at the end of the day. This was clearly not a good week for the pound.
What did the midweek point have in store though? This seemed to be the point at which the pound would fight back if it could, and indeed this was the case this time. It didn’t quite make 1.88 territory but it did claim an exchange rate of 1.8796 by the close of play.
Unfortunately it lost it the very next day, as the rate dipped right back to 1.8536. This was going to be a washout week, this much was clear – the only question now was by how much. The final exchange rate turned out to be 1.8451, which meant we had lost a total of just over three and a half cents this time.
A bad week for the pound – but at least exporters will be hoping for better results from these exchange rates.
The US dollar was seen to dip down against the Australian dollar last week. But even though it had a bad midweek struggle with the currency this time around, it managed to do better overall.
Last time it finished the week on 1.1515, but this week it had improved by Friday night to 1.1555.
The Euro definitely came out on top of these two last week; even though the Canadian dollar claimed 0.6337 on Monday night, it had dropped to 0.6236 by the time the weekend arrived.
Switzerland didn’t join the woes of Canada’s currency though. It managed to improve on the 0.6586 exchange rate of Monday night and go up to 0.6614 on Friday.
Finding articles about specific currencies on some of the world’s best websites can make fascinating reading. That is what you will get from this article on the Bloomberg website. This piece – gives you the lowdown on the Japanese yen, and more specifically what the finance minister in that country thinks of it.
So here we are at the end of another report – and it has to be said it is a rather worrying one. Will we end up with an even lower pound next week, or will it finally start to turn itself around? We’ll find out very soon – and we’ll see you then.