Posted by Allison on 24 March 2009, 10:14
So here we are into Christmas week, and we have more currency exchanges to get our teeth into. If you remember from our previous report, we had yet more bad news to tell you about. This certainly seems to be the way things are going at the moment, with the pound having real trouble when it comes to standing up against pretty much any other currency.
The US dollar in particular has proved to be a tricky one to counter of late, with the pound seemingly going into freefall. Unfortunately the season of goodwill won't automatically extend to our beleaguered currency, leaving us wondering whether we should just hope for better during 2009. It is a sad moment when the best we can hope for is to get 2008 out of the way in preference for a better year ahead, isn't it?
But perhaps we can pull out some reasonable results during these last few days of the year, and with that in mind let us see what happens from now on. As you may be aware, we are reviewing a short week here, since Christmas Day falls on Thursday and Boxing Day is on Friday. That means that we only have trading figures for Monday to Wednesday, before everyone took a prolonged breather for the festive season.
This could be a good time to reflect on what has happened up until this point, perhaps?
Last time we took a look at what was happening between the British pound and the US dollar, we actually had something of a successful week. Mind you, when you realise that 'successful' equates to increasing the exchange rate by just 0.0061, you will see just how frustrating the climate has been of late. Any increase is a good thing you might say, but could we hope for anything better than an amount this small?
Well if you were hoping to plan a US holiday in the near future you might want to hang onto that currency converter a little bit longer. The starting point for the Christmas week itself was 1.5010, which we had closed on the previous Friday night. What could we achieve – if anything – during this festive week, especially considering the short time we had to do anything of note?
Well Monday the 22nd didn't bring any good news to get us started with. By the end of the day the exchange rate with the US dollar stood at 1.4811, meaning we had already dipped well below that tentative $1.50 mark before the first day of the week was out. What on earth would happen next?
As it happened the next day brought very little difference, although the change we did see still went against us. This was evident with the final exchange rate for the day standing at 1.4807. It doesn't seem as if anything much is going our way at the moment does it?
So let's move on to Wednesday now, where things once again went in favour of the US dollar. By the end of trading on that day, the figures stood at 1.4752 – representing another slip by the pound. It also meant we would not see the heady heights of $1.50 this side of Christmas either.
So over the course of those three days the British pound lost a total of 0.0258 against the US dollar. Losing some two and a half cents over the course of three days and not even a full week certainly gives us something to think about, doesn't it? The US dollar has been firmly in control overall when it comes to standing up to the pound over the last few months. Whether this is something we can expect to continue or not remains to be seen.
So let us move on now to see how the pound performed against the Euro for those last three crucial days before Christmas. It certainly seems as if we are packing a week's worth of drama into just three days so far – so let's see whether that pattern continued into Europe.
Okay, so our starting point here was 1.0767 Euros to the pound, which we achieved at the end of the previous week. But once again if we were hoping for a great start to this shortened week, we certainly weren't going to get it. This was clearly the case when we were faced with an exchange rate of 1.0602 by the end of that day. That represents a drop of 0.0165 in just a single day's worth of trading. Could we improve on that at all?
The answer was not good – and it came the next day. We were barely hanging on to the 1.06 region to begin with, but that soon went by the way side as we struggled to maintain any kind of authority at all. By the close of play on Tuesday we were looking at a rate of 1.0593. That certainly didn't leave us with any confidence that we could regain some of our losses with just a single day to go before the markets closed for the Christmas break.
And indeed Christmas Eve brought a still lower exchange rate – although perhaps not quite as low as we may have experienced. By the time all thoughts of work were left behind for the extended weekend and we were all heading home for the break, the exchange rate had been fixed at 1.0534. That meant we had lost a total of 0.0233 during those three days. Would we be able to improve on that at all over the course of the New Year week, I wonder?
On that note let us move away from Europe and head over to Hong Kong, to see what we could hope to achieve there during these crucial three days. Last time we saw extreme highs and lows, and we thought that we were going to have a great week until the last day brought everything crashing down to ruin it. Were we in for another spectacular week this time around – or would it be a spectacular week for all the wrong reasons?
Let's find out. Our starting exchange rate on the Monday morning was 11.632, but if we were hoping for a grand start to the week in this country, we certainly weren't going to get it. Because by the end of trading on that first of three days, the pound could claim only 11.479 Hong Kong dollars. Already we had lost out on 0.153 in just twenty four hours worth of trading. Could this get any worse, we wondered?
Perhaps unsurprisingly given the results we have already seen for the US dollar and the Euro, the figures on Tuesday were worse than Monday's results. Not by much however, since the final exchange rate for Tuesday was just 0.003 lower, at 11.476. Could we now reverse things and get a better result on Christmas Eve, or was it simply too much to hope for? Perhaps minimising our losses would be a better thing to wish for at this stage.
The final day of trading against the Hong Kong dollar did indeed bring another drop in the exchange rate, as the final figure in the pre-Christmas currency trading was 11.433. That meant we had lost a total of 0.199 during the course of those three days. It does indeed make you wonder what kind of figures we would be looking at had we traded for a full week on this occasion.
From the disappointing figures of Hong Kong we move on once more, this time to New Zealand. Now if ever there was a country that saw real extremes of trading and exchange rates, it is this one. We have certainly seen highs and lows over the last few weeks and months, but would this shorter week be representative of that once more?
The last exchange rate we were left with was 2.6175 – and once again we had a significant low to kick off the week. By the end of that first day the exchange rate had fairly plummeted to 2.5707. That is a drop of over four and a half cents in a single day, which is quite alarming (although not nearly as severe as some of the drops we have seen against this particular currency in the past).
So what did Tuesday bring? Well fortunately we were able to recover something of our losses by bringing the exchange rate against the New Zealand dollar back up to 2.5924. The only question now was whether we could recover still more by the time the markets closed for the Christmas break.
Unfortunately, not only was the answer a definitive no, it also saw us end up with an exchange rate that was lower than the one we saw on Monday. By the close of trading the pound could claim only 2.5672 – representing a loss of just over five cents since the close of play the previous Friday.
Ouch. Our final stop for this shortened week is Australia, where we would hope for a better result – all the while knowing that the two countries do wind up with similar results quite often.
The previous week saw us finish off on 2.2041, after losing nearly seven cents over the course of the week. So how would this short week turn out for us?
Monday got off to what was perhaps a predictably bad start, finishing on 2.1621 for the day and certainly drawing comparisons with the situation we had come up against in New Zealand. Would Tuesday be any better or could we expect more of the same?
Well we did see a slight improvement but we still only managed to crawl up to 2.1655. And unfortunately the final day of trading saw us unable to make any real gains – although we didn't see a huge loss either. That final figure before the break came out at 2.1637, meaning we had lost just a little over four cents since the previous week.
So there we have it – that was the position the British pound was in as everyone packed up for Christmas. Next up comes the New Year week – giving us those final figures for 2008 to get our teeth into.
Despite what we have read above, the US dollar actually had something of a bad run in those last few days before everyone enjoyed their Christmas break.
The culprit was clearly the bad news regarding how the US economy could be expected to develop during 2009. This allowed other currencies to take advantage and increase their value over a poorer dollar – if only temporarily.
In those last three days before Christmas, the Euro actually got the better of the US dollar.
Moving from 1.397 on the 22nd, it managed to reach 1.400 by the 24th before breaking for the long weekend. Could the US dollar be a little shaky at the moment?
You may not hear about it too often, but the Swiss franc deserves a mention for its steady climb against the Euro in the short Christmas week.
From 0.6507 on the Monday to 0.6647 at the close of play on Wednesday, it certainly seems impressive at the moment. But will it continue?
It is always worth checking out new websites to see whether they offer just the right mix of news, views and ideas for you to further your interests in the currency markets. Whether you need a currency converter or something more complex, it's always a good idea to try a mixture of sites.
One notable site for currency news is www.newstin.co.uk. It might take a while to get used to the layout, but it is well worth it! You'll see why when you take a look at it.
Well that is all for Christmas week; next time we will be checking out the movements in the currency markets for the last few days of 2008. And of course although there is no trading on New Year's Day, the 2nd January falls on a Friday, so we will be able to show you what happened on that first day of trading in 2009 as well.
See you then!