The Ultimate Test for the British Pound?
Posted by Allison on 3 April 2017, 11:13
Whatever side you are on with Brexit, this was the week everyone was waiting for. Article 50 was triggered by Prime Minister Theresa May on 29th March, so the British pound would undoubtedly feel the effects.
An overview of the currency markets for March 27th – March 31st, 2017
The week got underway with the British pound standing on 1.2476 against the US dollar. This increased significantly to 1.2602 on Monday, but we then slipped back to 1.2560 on Tuesday, the eve of Article 50 being triggered. Wednesday saw what was perhaps a predictable slip, as the pound fell to 1.2441. However, the final two days of the week were a lot better, with each day bringing some improvement. By the time Friday night arrived, the pound was sitting at 1.2496 against the dollar.
How would the pound fare against the euro, though? We opened on 1.1547 here, before rising cautiously to 1.1573 on Monday. We then dipped – just as we had against the dollar – to close Tuesday on 1.1566. Now came the litmus test, however, with the Article 50 trigger on Wednesday and three days’ worth of trading to finish. We needn’t have worried though, because the pound increased in value on each of those three days. This meant we finished the week on 1.1688 – much better than we had started on.
So, our third stop is with the Hong Kong dollar, giving us a chance to see whether the British pound could achieve something of note here, too. We began on 9.6920 before experiencing the Monday rise we had seen elsewhere – this time taking us to 9.7894. The next two days were not as encouraging, with the pound dipping on each day and falling to 9.6663 by Wednesday night. We still had two days to go, though, and we had some excellent news here that took us to a much better 9.7102 by Friday night. This week was turning out to be a good one for the currency.
Time to view another dollar currency now, with the pound going head-to-head against the New Zealand dollar. This time, we began on 1.7784 and had two encouraging days that saw us end Tuesday night on 1.7875. We fell on Wednesday though, going down to 1.7735. What would the final two days have in store? As it turned out, we would do far better once again, finishing on a positive note with an exchange rate of 1.7894 in place.
Over in Australia, our final stop for the week, we began trading on 1.6376 before experiencing those two good days to start things off. This brought us to 1.6518 by Tuesday night. Unfortunately, we then had two bad days, bringing us down to the low point of 1.6231 for the week. We did recoup some losses on Friday, rising to 1.6343, but this wasn’t quite enough to recoup all our losses for the week.
Notable events in the world of currency
A slight dip against the Canadian dollar
We expected to do fine here, but we lost a little ground overall, dipping from 1.6683 to 1.6673 over the week.
A great week against the Swiss franc
We had a successful time here, rising from 1.2376 and finishing in style on Friday night with a rate of 1.2502 against the franc.
Soaring against the Icelandic krona too
Here too, we had some good news to enjoy. We started on 137.824 before securing a closing rate for the week of 141.382.
Some may have assumed the process of triggering Article 50 and Brexit would send the pound into freefall. No such event occurred, though. This may be curious to some, but it perhaps shows the relative robustness of the currency to go through the process and weather the storms.
Now, we go into a period of negotiations that could see further sharp changes in the position of the pound on the currency markets. We will be watching to see what happens next.