Posted by Allison on 8 October 2012, 14:13
Welcome back to another round of exploration on the currency markets. The pound would be in for a challenging week this week, as it went up against the major currencies around the world. Sometimes it becomes clear early on that the pound doesn’t have what it takes to get good results across the board. Here’s how things turned out this week.
Let’s see how the week got started by focusing on the British pound and its standing against the US dollar. When the week got underway we were sitting on a rate of 1.6201. This dropped to 1.6130 by the end of day one, so we didn’t get the positive start we wanted. After a rise the following day the pound slid back again before recovering to 1.6186 at the end of the week.
Next up we have the head to head between the pound and the Euro. The pound opened on 1.2530 on Monday morning, before edging down slightly to 1.2526 to close the day. This set the pattern for the rest of the week and eventually the pound closed down on 1.2449. Given the downward spiral it could have been worse.
Let’s move on to see whether the pound could do well against the Hong Kong dollar instead. The opening rate here was 12.562 and again we saw an initial drop to 12.507 on Monday evening. The low point came on Thursday when the pound fell as far as 12.492 and then closed out the week slightly higher on 12.549.
Our fourth stop is as always with the New Zealand dollar. Here we opened on 1.9467 and again saw the initial drop on day one, which took us down to 1.9457. The following day was more disappointing though, as we dipped down to 1.9386. Was this a path we’d stay on throughout the week or was there better news in store? Fortunately for the British pound there was better news, as it managed to push back and get as high as 1.9638 to finish the week.
So would we be able to achieve something similar against the Australian dollar? We started with a rate of 1.5532 and managed to push up to 1.5652 after two days of trading. But this would not be the best news of the week. By the time Friday night beckoned we were on a much healthier 1.5788, so things were looking up for the pound.
Here the pound went from 1.5893 to a marginally lower 1.5873 on Friday evening.
The pound didn’t do particularly well here either, as it started on 1.5160 and finished the week lower on 1.5078.
Here too the news wasn’t good. The opening rate of 200.325 dropped to 197.628 by the time the week was over and done with.
So we can see this has been a disappointing week for the British pound. But elsewhere there have been other news stories that are worth a look. A good example is the visit from Angela Merkel to Greece very soon, a visit that is tied into the troubles Greece is having as part of the Eurozone. Greece could well run out of money very soon and this is having an effect on the exchange rates between the Euro and other countries. The situation with the Euro does affect the exchange rate so it is worth watching to see how this situation develops.
All in all the week has been a challenging one. Perhaps things will improve in the near future but it seems certain that it will be an uphill struggle for the British pound. We’ll be back next week to provide more news and insights into how the currency is perfoming.