Posted by Allison on 11 June 2009, 11:07
You don’t have to be an expert to know that things haven’t been too good for British Prime Minister Gordon Brown of late. With doubts – voiced and otherwise – about his strength of leadership, it wasn’t surprising that the pound suffered alongside him.
The pound had been doing very well against other main currencies such as the US dollar. This was particularly good since we have had a rough old time of it over previous months. Finally getting back on our feet was a good thing, and a lot of people were cautiously celebrating this event.
But then along came all the troubles of the current government. Everyone has heard about the expenses furore, not to mention all the other troubles Gordon Brown has been through lately. Things may have been looking good for the British pound, but they certainly weren’t looking as good for the British government.
And unfortunately that had a knock on effect on the pound. News stories such as this one in the Guardian – available to view here - became the norm. And with the European elections coming up on 4th June, it seemed as if the pound might just take a beating.
And it did. Let’s take a look at the figures to see exactly what happened. It started the month rather well, with an exchange rate of 1.6382 at the close of play on the 1st June. Since we had spent ages praying we would get back above the $1.50 rate, you can see that this is very respectable given the circumstances.
Tuesday of that week was promising too, as the exchange rate went up further to 1.6456. It certainly seemed as if the pound was firmly in charge of the US dollar at this point.
But we didn’t reckon on the effect of those elections, and all the infighting that was going on in the Labour party. Many people think that the party is on its last legs, and it would appear that it was going to drag the pound down with it very soon too.
That may have been hard to believe on that Tuesday, as the pound was doing so well. Anyone checking their currency converter would have been pleased with the figures. But it wasn’t going to stay that way.
It did manage to increase its standing on the eve of the elections, as it finished the day on 1.6525. But that was as good as it was going to get. On the 4th June, the day of the elections in the UK, the pound fell markedly to 1.6221. Everyone knew the government was going to do poorly, and they did. But did we expect the pound to do poorly as well?
Unfortunately it finished the week in an even worse position too, landing on 1.6124 at the close of play on Friday night. It wasn’t a good week for British politics, and the government’s opposition sought to point out that they weren’t doing the economy any good either.
By the following Tuesday, things were back to 1.6171, but there was still a long way to go to regain the figures we had before that election. Hopefully things will right themselves, but there is some way to go for that to happen yet.