Election Week Leads to Drama on the Markets
Posted by Allison on 13 June 2017, 14:30
Here we are again, ready to evaluate the performance of the British pound on the currency markets. Would we look back on this week as a defining moment for the pound? Let’s find out.
An overview of the currency markets for June 5th – June 9th, 2017
The week got underway with the pound standing at 1.2853 against the US dollar. This improved to 1.2910 by the day’s end, but there would be a drop the next day. This took the pound back to 1.2906. There was a marginal improvement on Wednesday, but this barely changed the figure we see here. With the General Election taking place on Thursday and a positive result expected for the government, the pound perked up to 1.2943 as the markets looked confident of a good outcome. However, the hung parliament that resulted meant the pound slid to 1.2752 come Friday evening.
So, would we see a similar result against the euro? The pound began trading on 1.1458 here, and again enjoyed a good start, rising to 1.1477 by Monday night. It slid back to 1.1463 the following day, before enjoying two much healthier days to take it to 1.1526 on Thursday, before the polls closed for the election. But of course, events overnight into Friday then saw the pound lose steam, falling to a disappointing 1.1410 as uncertainty surrounded the result.
Over to our third comparison now, as the pound is compared to the Hong Kong dollar. We opened trading on 10.016 here, before improving on Monday to finish on 10.059. The following two days were not as good, but fortunately for us, the falls were infinitesimal, and that meant our exchange rate on Wednesday evening essentially remained at 10.059. We then perked up to 10.091 as hope for a good election result continued to peak, before falling to 9.9427 on Friday as the result became clear.
By now, the impact was becoming more obvious. So, would the pound experience much the same against the New Zealand dollar? It began on 1.8117 before slipping back over the course of the first three days of the week. That meant the currency stalled on 1.7948 by the time Wednesday evening rolled around. The positivity in the air on Thursday saw it rise to 1.7952, although this was hardly a big improvement. And then, of course, we fell to 1.7709 on Friday night. So, once again, we saw how the surprise result influenced the pound no matter which currency it was compared against.
Finally, we have the Australian dollar to look at. But as you might guess, much the same picture showed up here, too. We began on 1.7386 and then dipped over three days, arriving on 1.7081 by Wednesday evening. Thursday saw a positive result, rising to 1.7167, before the rot set in on Friday. That was when the pound fell to close out the week on 1.6929.
Notable events in the world of currency
Another drop against the Canadian dollar
This result won’t surprise you, as the pound fell from 1.7382 to 1.7227 last week.
More disappointment against the Swiss currency
The Swiss franc was too much for the pound to contend with too, as the pound dropped from 1.2482 to 1.2395 last week.
Another notable fall against the Icelandic krona
Even the less well-known currencies got the better of the British pound towards the end of last week. The pound started here on 128.394, before falling to 127.771.
So, we can see how devastating the surprise election result was for the British currency. As things begin to develop following that result, we can see whether the pound will recover, or whether it will remain in an uncertain state. We suspect the latter will be true until we see whether the new arrangement the government has in place is a success. Until then, we must expect the pound to remain as it is, or perhaps even to lose more ground. We will be watching to find out what happens next.