Posted by Allison on 25 January 2016, 13:05
Some weeks do deliver more interesting patterns than others in the currency markets. This would be one of those weeks, as we are about to find out.
Here we go then with an exchange rate of 1.4332 to start things off against the US dollar this week. Unfortunately it soon became clear the British pound was in a tough battle against the US currency. Over the first four days it experienced drop after drop, and while none of them were alarming in themselves, the cumulative total meant that Thursday night’s exchange rate was down to 1.4113. Fortunately, and somewhat unbelievably, Friday’s rate perked up considerably. This left the pound on 1.4323 against the dollar as the markets closed – only a small deficit over the week as a whole.
Next up is the euro. The British pound opened on 1.3131 here, but once again the same pattern soon became apparent. This meant the pound dropped throughout the first four days, eventually settling on 1.2956 by Thursday evening. But could it perform the same escape act it had against the US dollar? Actually, it could – and it even went one better. A huge improvement on Friday saw the pound finish the week in better shape than it had started it – on 1.3252 against the euro.
Over to Hong Kong now, to determine whether the same pattern would play out against their dollar. It will perhaps come as little surprise to find it would. The pound began trading on Monday morning on 11.169 before falling steadily throughout the first four days. This took it down to 11.036 by Thursday evening. Once again, it managed to improve on Friday, this time finishing on a rate of 11.158. This was just shy of the opening rate on Monday, but it did regain most of the losses.
Our fourth stop is with the Kiwi dollar in New Zealand. The pattern can always be a little different here. We began on 2.2459 before dropping to 2.1920 on Tuesday evening. Wednesday was better, as the pound edged back up to 2.2251. However, another drop was in store on Thursday, which this time took the pound to 2.1948. Could it perform another escape act on Friday? It did finish in better shape, closing out on 2.2006, but this was markedly down on the week’s opening rate.
Finally, it’s the turn of the Australian dollar to see whether it could beat the pound over the course of the week. The pound began trading on 2.0873 before matching the performance against the Kiwi dollar and falling to 2.0494 by Tuesday night. We then perked up to 2.0670 before having another two poor days. This meant that by Friday night, the pound had fallen to just 2.0381.
A big shock was in store here, as the pound fell from 2.0812 to close on 2.0297 today.
Here there were four bad days followed by one good enough to save the entire week. The pound rose from 1.4380 to 1.4511 against the Swiss franc.
Here too there was better news, at least. The pound began the week on 185.765 and had a shaky start before finally finishing better off at a rate of 186.257.
So it was a strange week, all in all. We thought we were in for some poor results in several cases, and yet Friday proved to be a strong day for the pound – and a much-needed one as well.
Perhaps next time we can get some better results earlier on in the week, but of course you never know what might affect the progress on the currency markets. At least this time we can take heart in the fact most of the results went our way – even if not all of them did.