Posted by Allison on 1 February 2016, 18:00
Welcome back to another fresh look at the currency markets. This week, we focus on the final week of January. The month seems to have flown by, but would the British pound be able to end the month on a good note – or not?
At the beginning of the week, the British pound was standing at 1.4323 against the US dollar and we were hoping for a reasonable week. However, it soon became clear this would not be the case. The pound slipped in value over the first couple of days, taking it to 1.4241 by Tuesday evening. Although it improved slightly – to 1.4332 – on Wednesday, this wasn’t enough to stop the overall slide. Two more poorly-performing days took it to 1.4291 by Friday evening.
As it turned out, the pound would have the exact same performance against the euro as well. An opening rate of 1.3252 was followed by two bad days, and by Tuesday night we were down to 1.3141. Wednesday, once again, was better, taking the pound into a minor recovery and a day-ending rate of 1.3163. But once again it finished poorly, with two bad days resulting in a week-ending rate of 1.3087.
Could we perhaps hope for something a bit more encouraging against the Hong Kong dollar, or would the news be equally as depressing there as well? The picture here does often mirror that seen elsewhere, particularly against the US dollar, and the same would be true this week as well, unfortunately. The pound began trading on 11.158 before falling over days one and two to 11.104. It then perked up to 11.171 on Wednesday before tumbling again over the remainder of the week. This left the pound on 11.137 by Friday night.
If we were going to see a different story at all this week, it would have to be against the New Zealand dollar and/or the Australian dollar. Things started off encouragingly against the Kiwi dollar, as the pound rose from 2.2006 to 2.2047 by Tuesday evening. We then experienced a drop to 2.2035 on Wednesday. While Thursday was better, finishing on 2.2136, Friday ended up ruining the whole week. The pound finished off with an exchange rate of 2.1970 and a disappointing loss all in all for the week.
Finally, we may just see something better against the Australian dollar. Surely the pound had to perform well somewhere? The pattern here was different once again, and it did start well. The opening rate of 2.0381 rose to 2.0434 over the first two days. However, from then on things just got worse and worse. By Friday, the British pound had sunk to a low point of 2.0138. This left us with no good results at all from the main five currency comparisons this week.
Here too there was nothing but bad news, as the British pound slipped from its opening rate of 2.0297 to finish the week on 2.0106.
After a troublesome week, it was nice to at least see a good outcome here. The pound started on 1.4511 and managed to improve to 1.4584.
Unfortunately, the good news could not last. The pound started the week on 186.257 and finished it lower down on 185.349.
So as we can see, this was an arduous week for the British pound. Among all the comparisons we have looked at, there is but one piece of good news, against the Swiss franc.
It does make us wonder what the next week has in store, as we head into February. This year is a leap year, and the pound may well need that extra day to help it improve its position on the currency markets.