Posted by Allison on 19 November 2018, 13:37
Welcome to an important review of the currency markets for last week. The British pound was up against the announcement of a breakthrough on the Brexit divorce agreement from the EU. How did things pan out?
The British pound opened on 1.3033 against the US dollar last week, but it soon dipped to 1.2865 by the end of day one. It did recoup some of those losses over the following two days, finishing on 1.2976 by Wednesday night. Thursday then saw the effect of the Brexit announcement, taking the pound back to 1.2792 – over two cents lower than we’d started the week with. Friday saw a recovery to 1.2842 but this was still some way from the opening salvo we had begun on.
We were not expecting a good result against the euro. It was more a case of how low things could go. The pound opened the week on 1.1487 here before dipping to 1.1420 on Monday. Tuesday brought better news ahead of that announcement, as the pound rose to 1.1501. This would be the best news we would get all week. A slight dip on Wednesday was followed by a freefall the next day, as the pound fell to a low of 1.1316. While it did show early signs of recovery on Friday, it only managed to creep up to 1.1318 to close the week.
So, what happened elsewhere? A similar pattern did play out in other quarters. The pound opened trading on 10.205 against the Hong Kong dollar, dipping to 10.077 on Monday before enjoying the same two good days it had against the American dollar. The high point of the week came on Wednesday with a rate of 10.163 by the end of the day. Then the pound fell to 10.021 on Thursday before recovering some ground to finish the week on 10.058.
The pattern against the New Zealand dollar and its Aussie counterpart can often take a different tack. However, the Brexit announcements proved this would not be one of those weeks. After opening the week on 1.9315 here, the pound soon found itself down at 1.9070 by Monday night alone. The Kiwi dollar pushed back most of the week, and while a slight improvement was seen on Tuesday, there was worse news to come. The low point came, once again, on Thursday, with a drop to 1.8785 for the pound. It recovered marginally to finish on 1.8848 for the week.
We should perhaps expect a similar scenario against the Australian dollar. Unfortunately, this did prove to be the case. Opening the week on 1.7992, the pound fell to 1.7842 on Monday before managing to get back almost to the opening rate by Wednesday. However, Thursday’s seismic changes saw it fall to 1.7612 before it clawed back a small number of losses to end Friday on 1.7683.
We should perhaps not expect anything else. Overall, the pound went from 1.7195 at the start of the week to 1.6926 by the end of it.
The changes were seen at the same points during the week throughout the currency markets. Those changes meant the pound fell from 1.3111 to 1.2938 against the Swiss franc last week.
We had to look hard to find some moderate losses last week. The pound opened on 159.098 against the krona, and while it climbed to 161.060 on Wednesday, the week’s events meant it ended on 158.687.
So, there were some understandable and predicted losses to cope with last week. Will the pound stabilise as time goes on? We must wait and see whether the opening days of the new week will see better results. A lot will depend on the political landscape – and it’s anyone’s guess what that may look like going forwards.