Were These Troubling Times for the British Pound?
Posted by Allison on 13 June 2016, 11:04
We simply don’t know what to expect from one day to the next at the moment. This is largely because the referendum is making markets nervous, as they don’t know which way the scales are going to tip. So how would the pound react this week?
An overview of the currency markets for June 6th – June 10th 2016
This week would begin with the British pound on 1.4432 against the US dollar. We didn’t start well, as the pound dipped to 1.4416 on the Monday. However, two better days were to follow, taking the pound to 1.4578 by Wednesday evening. While that was good, the encouraging news would not continue in the same vein. Instead, the pound would dip back to finish the week on 1.4403 – lower than its starting rate had been.
The head-to-head between the pound and the euro is perhaps even more interesting in light of current events. The opening rate here was 1.2939 and we saw an immediate drop to 1.2703 on Monday. The pound did then recover somewhat on Tuesday as it worked its way back up to 1.2840. But as it turned out, this would be the sum total of good news that would come our way this week. By the time Friday night arrived, the pound had experienced three losses that took it back to 1.2742.
Third on our whistle-stop tour of the currency markets this week is the Hong Kong dollar against the pound. Our currency started on 11.216 against the Hong Kong currency, but again it dropped back on day one as it fell to 11.198. It did then have two encouraging days, much as it had done against the US dollar. This meant it had improved to 11.318 by Wednesday evening. But again, these were followed by two poor days which took the pound back to 11.179 at the end of the week.
Over in New Zealand, things can always be difficult to gauge. You could end up with a big loss or a big gain in the space of a week, so which way would things swing this time? The pound began on 2.1073 but it suffered a loss on day one that took it to 2.0805. It performed much better on Tuesday, soaring back to 2.0955, but this would be as good as it could do all week. By Thursday night, the pound was as low as 2.0316 and it could only recover by a small margin to 2.0323 this time around.
Finally, would the Australian dollar be able to beat the pound back into submission as well? The pound began trading on 1.9922 here but again, it immediately dropped to 1.9584 on Monday night. While it did manage to do slightly better on Tuesday, this only meant it regained a small amount of the losses it had shed the day before. When all was said and done this week, the pound had fallen back to 1.9462.
Notable events in the world of currency
A steady drop against the Canadian dollar
Things did not look good here as the pound gradually slid from 1.8883 to 1.8361 this week.
The same pattern was borne out against the Swiss franc
The pound was not having a good week, this much was clear. In Switzerland, it meant the pound dropped from 1.4297 to 1.3869 this week.
Another drop against the Icelandic krona too
Here too there was bad news for the pound as it started the week on 180.331 against the krona and fell to 177.121 to close it out.
Well, there was no good news to be found anywhere this week, it seemed. Perhaps there would be better news to come at some other point, but of course this seems unlikely at the moment. The pound may seem embattled, but there is a much bigger picture here that puts all this into the background. We shall keep up with the latest developments on the currency markets as they occur, with another report on the way next week.