Posted by Allison on 24 March 2009, 10:13
Last week was certainly a week where we reported highs and lows, but in the end they all evened out to produce losses in many countries for the beleaguered British pound.
That was our report, but as always of course the markets were still in force and still trading. So this week we can see once more what has happened in the last seven days. If you have been watching the news you will know what has been going on in some respects, but our report will still very definitely be worth reading, since it covers far more than most news reports do.
As we approach the festive season it will certainly be interesting to see how the British pound performs in the final days of 2008. Perhaps we can hope that 2009 will be better for it than the latter months of this year have been? But with a recession on the brink of being a reality in the UK it seems unlikely that this could actually be the case.
So let's take a look at the recent performance of the pound in all our usual countries, to see whether it has managed to claw back any ground at all of late.
Last week we saw that the US dollar had the upper hand once again, because the British pound finished just below that $1.50 threshold. By the end of trading it had levelled off at 1.4949, leaving it some work to do this time around if we wanted to see anything worth celebrating at all.
So how did the pound do? Let's find out.
Well we certainly made a good start, and as we have seen before this can sometimes be built on in the coming days. By the end of the first day of trading for the week, the pound was standing at 1.5021. That may only have been a slight difference, but it was heading in the right direction and it meant that we hopefully had something to start building on.
And indeed the following day certainly seemed to make that a reality. By the end of Tuesday the exchange rate against the US dollar stood at 1.5320 – nearly three cents up on the previous day. Was this the start of a great week?
Wednesday brought a slight drop, but only very slight thankfully as the pound fell to 1.5305. The question now was whether we could hang on to the increase for the remainder of the week (or even maybe do even better), or lose it all by the time the week was out. There was no way of telling what could happen at this stage.
Thursday brought another increase but it was only a relatively small one, to 1.5370. So it was all down to the last day of the week to see if we could hold on to this tenuous increase that we had made. And unfortunately for us the news wasn't good.
By the close of play on Friday evening the exchange rate stood at 1.5010 – meaning we had lost 0.036 in a single day and wiped out much of the good work that had been done over the course of the week.
In the week as a whole we had managed to increase the exchange rate by just 0.0061 against the US dollar. Perhaps we should be grateful for any kind of increase at all though – even if the only reason is because it means we aren't looking at an exchange rate that is even lower than the week before.
Interestingly enough it is the pound's performance against the Euro at the moment that is proving more fascinating. Last week we finished up on a rate of 1.1206 against the Euro, but many people have been pointing out that the pound is dipping towards being equal with the Euro. And that has been used as a reason for wanting to join the single currency.
It would seem crazy to do something like that when things are so tenuous in many countries at the moment, but let's see how the exchange rate between the two currencies did at the moment. If you are thinking of a holiday somewhere in Europe in the near future, you may want to keep your currency converter handy because this is rather interesting.
We started off badly last week, and by the end of Monday the exchange rate had dipped down to 1.1118. Only a small change, but it would set the course for what was to follow.
By the end of Tuesday that rate had recovered slightly to 1.1190, but it was merely a slight increase. What would come next?
The answer was a rate of 1.0886 – a sudden dip that perhaps we were not ready for, even though we knew the Euro certainly had the upper hand at the moment. And Thursday almost seemed to indicate that the pound had all but given up, as the rate slipped again to 1.0516. Could we hope to pull even a mediocre result out of the bag to enable us to rectify at least some of the damage that had been done in the last few days?
We should never put the pound down too far, because that is exactly what it managed to do. The final figure for the week, achieved just before everyone packed up and went home for the weekend, ended up as 1.0767. That meant we had regained two and a half Euro cents over the course of the day. But we still lost nearly four and a half cents over the course of the whole week, so we actually didn't have anything much to celebrate at all.
Last week we had a good result in Hong Kong, so the question now was whether we could pull off the same thing two weeks running. Last time we were left with a closing result of 11.585, so we were looking for a good start against a currency that we had already got the upper hand over.
Monday looked good for starters, as we bagged an exchange rate of 11.641 to close on. An equally good result the next day would be worth waiting for, and in fact that was exactly what we got, as we finished on 11.873. Was this going to be a great week to remember?
Wednesday saw a slight dip unfortunately, but only slightly and the end result was a figure of 11.862. That was not too bad, but with two days still to go it was evident that anything could and probably would still happen.
Thursday certainly proved that to be the case – but luckily the result went in our favour and we closed on 11.912. That meant we had gained 0.05 in the course of just twenty four hours. Could we hang onto this gain for one more day to see the week out?
Well the result, when it came, showed that you just never know what is going to happen next in the currency markets. Because by the end of the day on that Friday, we were staring at a closing rate of 11.632. The peak of the day before had led into the lowest rate of the week. We had still gained 0.047 since last week, but it could have been so much more.
With that sobering news, let's move on to New Zealand. Last time we finished up with 2.7455, representing a loss of some 0.0257 cents over the week as a whole. What would we be facing this time?
Monday saw the first drop of the week, to 2.7174. Not the best start, but as we have seen so many times in the past New Zealand's currency often gives us an interesting time with big rises and falls going into the mix.
Tuesday went in the other direction, with a closing rate of 2.7213 to think about. Where would we go from here, and which country would get the upper hand?
The answer to that question would be New Zealand. That answer came the next day, as the exchange rate fairly plummeted to 2.6452, making a loss of over seven and a half cents overnight.
Thursday brought another sharp drop to 2.5675, and you would have been forgiven for thinking you didn't want to look any more to see what else might happen next. We had all but lost this battle for the week - that much was clear.
We recovered slightly on Friday by gaining some ground and ending on 2.6175. But we had still lost a total of nearly thirteen cents in the course of a week, so this was something to forget, leaving us to hope for better next time.
And finally we move on to Australia, where things do sometimes mirror New Zealand to a degree. Let's hope they didn't mirror them last week.
We were starting from 2.2738, and the first dip came on the first day, reducing that amount to 2.2510. Was this the start of that all too familiar slide, we wondered?
Tuesday actually defied that, as we finished on 2.2799 for the day. Now that was the type of result we wanted, so all we could hope was that this was the start of a good run of exchange rates that would last for the rest of the week. We would have to wait and see.
The following day brought the midweek dip that we really didn't want to see though. By the close of trading on Wednesday we were looking at an exchange rate of 2.2284. That meant we had lost over five cents in a day – and we couldn't afford to do that.
Unfortunately for us things got even worse the following day, as we finished on 2.1805. Could we hope to regain even some small amount of ground before the close of trading on Friday?
That at least we did manage to do – as the final exchange rate for the week was 2.2041. But we had still lost 0.0697 over the course of the week; an amount we could ill afford to lose.
So once again we are arriving at this stage of the week telling you that we have had another bad one. How long will it be before we can start reporting good news at this stage?
It seems as if all eyes are on the pound at the moment – and many are now wondering if it will reach what is called parity with the Euro. That would mean one Euro is worth one pound… and it could well happen. Keep watching this space…
After slipping earlier in the week and finishing at 0.6841 on Thursday, the US dollar picked up against the Euro again on Friday.
It finally finished on 0.7173 for the week end, and seems to be gaining the upper hand against the single currency for Europe. But will the trend continue?
The Russian currency was also hitting the headlines last week. The Russian government decided to let the rouble slide somewhat, and this resulted in interesting results against the US dollar.
On Thursday one dollar got you 27.248 roubles, and the following day that had improved to 27.952. Will it go any higher?
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So there we are for this week. As we approach the festive season we are left wondering how the pound will make the transition from 2008 to 2009, and we will as always be back soon to tell you what happens next.