Posted by Allison on 23 August 2010, 10:40
Hope you had a great weekend, but now it’s time to get back to work. We are ready to look at the last three days of the week that ended on August 20, 2010. How do you think the British pound fared? Well, let’s just check it out and see for ourselves.
Against the pound, the first half of the week was in positive territory against the US dollar, but that ended on August 20 as the pound slid down by a significant amount. The pound slipped a bit against the euro and the New Zealand dollar and then recovered by Friday. The opposite was true of the Hong Kong dollar, with the pound increasing a bit on Wednesday and then falling the next two days.
But the pound rose steadily against the Australian dollar.
Confused? What a week with volatility the name of the game still.
Why did the pound suffer so much against the US dollar? The pound rose on Wednesday to 1.564436 and fell slightly to 1.564317 on Thursday. That was well and good, and then Friday the whole picture changed. The pound fell to 1.551825 and that was a .799% decline.
What brought about this bad note for the week? It seems that employment went up which was great but the Bank of England reported that the pace of the economy is going to slow. Seems we can’t win right now and can expect to live with volatility until this economy straightens out.
So let’s look at what else went on…if we dare.
Starting with the euro, there was a mixed bag of news. From Tuesday evening to Wednesday the pound fell to 1.214624, but reversed course the next two days. By day’s end on Thursday, the pound was at 1.218695 which was a .335% increase. Then it kept climbing up to 1.220852 though at half the rate of change from the prior day.
A similar pattern was found when looking at the New Zealand dollar. On Wednesday the pound fell over 1% to 2.179036. But then it rose on Thursday by almost 1% climbing back to 2.199378 which was quite close to the Tuesday night rate of 2.201944. Not much progress found there. By Friday we found the pound at 2.206812.
Let’s move on to the Hong Kong dollar shall we? The pound was at 12.140826 on Tuesday night, so what happened the last half of the week? Well the pound rose on Wednesday and then fell the next two days. Friday saw a .752% decline in the pound and at the end of the week the pound was at 12.064827.
So what about the Aussie? Well the Australian dollar did not do well this week because an unpredictable election took place. In fact, the election left a hung parliament which was not good news for Australia. The Aussie was quite weak. So the pound rose the last half of the week reaching 1.733390 Wednesday and 1.737615 on Thursday. Then on Friday it rose yet again to 1.747528.
The pound has been rallying recently, but will it last? Some analysts are now saying no. It seems the UK efforts to bring the deficit down are also bringing economic growth down. Can’t win it seems. We’ll just have to watch and see what happens with a new week getting under way.
The Japanese yen is trending up as the economic recovery pace goes down. It seems that investors are looking for refuge again. The yen ended Friday at 85.390607 against the US dollar.
The euro zone economy seems to slowing and that is dragging down the euro. It is close to a 5-week low of $1.2664 and is now at $1.2716.
The UK pound may have rallied recently against the euro, but there’s a chance that good news could be coming to an end. Reuters discusses the pounding the pound might take as a result of budget deficit cutting efforts. You can read the article here and form your own opinion.
Some predictions say the pound could weaken by as much as 8% between now and the end of the year. What a market investors face. It just doesn’t seem to want to smooth out and volatility is with us for a while. Maybe the economy will pick up again.
One can only hope.