Posted by Allison on 24 March 2009, 10:22
Last week we saw that the latest set of currency exchange rate figures left us with mixed feelings. On the down side there were some losses to contend with against the major currencies. But on the good side those losses were considerably lower than they could have been.
We've seen weeks in the past where the pound has gone into what amounted to a freefall – plummeting against many of the major currencies. That didn't happen last time; instead we saw minor losses which did add up to bad news for the British pound, but it could have been a lot worse than it actually was.
The question now is what awaits us in the weeks to come. We know enough to recognise that the current situation is not going to improve in the near future. The depth of this recession is a strain on many areas of the world, and Britain is no different in that respect. Sometimes it seems as if the country which announces the most bad news in a week is the one to experience the biggest drops in the exchange rates.
In essence this is completely true, but of course there is a lot behind those exchange rates. As we are about to see all the major currencies are having problems at one time or another, and we can expect these choppy waters to extend into the future for some time to come.
So let's see what happened last week. Keep your currency converter handy if you are thinking of heading off on holiday anywhere – you might get the answers you need in a few moments time.
Last week we saw the British pound slide against the US dollar, but only by barely a couple of cents. It seems strange to think of a loss as good news, but in the current climate it could have been a lot worse. And indeed we have seen worse results in the past.
The final figure we were left with was 1.4503, so what would this week bring?
The answer was a drop in the exchange rate right on the very first day. If the 1.4270 exchange rate that was in place by the close of play on Monday was anything to go by, it was clear that this wasn't going to be a good week for the pound. This equated to a drop of over two cents on the very first day. Considering the fact that we lost less than that over the whole week last week, this wasn't a good start.
So what did Tuesday bring? Well, there was actually very little change that day – although what little there was turned out to be in our favour. By the end of the day the exchange rate stood at 1.4274.
Wednesday was the day when things swung back in favour of the US dollar though. Perhaps we had already seen the biggest change of the week back on Monday, because once again the difference was a small one. By the time everyone headed home on Wednesday, the exchange rate was at 1.4239. It seemed that we weren't going to be able to get the result we wanted this week. It may just be a case of limiting the damages as much as we could.
Thursday proved to be something of a surprise then. There was more movement on the penultimate day of the week, and it went in our direction for once. We managed to gain by more than a cent that day, leaving the exchange rate standing at 1.4399 overnight, with just one more day of trading to go for the week as a whole.
So what could we do next? Could we hope to get back on track on that last day?
Perhaps predictably, given what had already happened that week, the answer was no. The final figure as the markets closed for the week was 1.4291. That meant that overall we had lost 0.0212 – a little more than the week before, with most of that loss occurring on the first day. We were never able to recover.
Let's move into Euro territory now, where the British pound claimed 1.1310 Euros at the end of the previous week. Would we end up having a similar week here where we took a nosedive on day one and never recovered?
Well in actual fact we certainly did go downhill on Monday. By the end of the day we were down to 1.1179, making us wonder whether we would have exactly the same kind of week that we'd had in the US. Tuesday brought better news though, as the pound pushed back up to 1.1298 by the end of the day. Was this now going to be all good news for the pound, or would the Euro be able to reclaim the early start it had on Monday?
As it happened Wednesday saw barely any movement at all. The figure at the close of trading on that day was 1.1304 – affording a slight increase to the pound, but hardly anything worth noting down, other than the fact we had taken the upper hand. What could we do with the remaining two days left to us?
Well as it turned out we would see another couple of slight increases for the remainder of the week. Perhaps this was just as well, as large jumps can make for an uncertain environment. On Thursday the exchange rate went up to 1.1334, once again in favour of the pound. And the trend continued to the end of the week, with the final figure being noted down as 1.1350.
So where did that leave us over the week as a whole? After all we'd had a huge dip down on Monday, so anything after that was really nothing more than recovery. Did we manage to add anything on to the exchange rate over the week as a whole?
In fact we did – we added on a slight 0.004 over the course of the whole week. Hardly anything to write home about, but it was enough to warrant a sigh of relief that we hadn't lost any ground over the week as a whole.
Let's move across into Hong Kong now, where the previous week saw a closing figure of 11.243. So given the results we have already had from the US and from Europe, how were things going to pan out in Hong Kong?
We got an early indication on the first day, when the exchange rate went down to 11.065. So it was another drop we could have done without – but would this be another example of a bad start but a good finish?
Let's see what happened next. Tuesday saw another example of having very little to talk about, since the exchange rate moved only slightly to 11.068. At least it did go in our favour, but it would be nice to recoup some more of the early losses.
Next came the midweek point. Unfortunately this didn't go in our favour as the exchange rate dropped back to 11.042. It seemed the Hong Kong dollar had a little more energy in it than the pound did at this point. This was turning into another struggle at close quarters – which was why Thursday's closing figure may have come as something of a surprise.
It turned out to be 11.166 – seeing the pound jump up more than we might have expected. The only question now was how well it would do for the end of the week. We had just one more day to go, so could we hang on to Thursday's gains?
The answer was no. By the time the week was over the exchange rate had settled on 11.081. That meant we had lost 0.162 since the same time the previous week, so it wasn't a good time over in Hong Kong.
Over now to New Zealand and it is here that the results are always a little interesting. Last time we ended up on 2.7512, so could we achieve a better result and gain some ground this time around?
Monday was something of a non starter if we were expecting a major result; we finished up on 2.7543. Now this country is one that often gives us big alterations on a daily basis, so it's worth bearing that in mind as we take a look at the rest of the week's figures.
And we can see just that on the following day. By the time the markets closed on Tuesday we ended up on 2.8008. That's a huge jump of 0.0465 in a single day – giving us ample evidence of the fact that we do see big changes against the New Zealand dollar.
Unfortunately the British pound slipped back slightly on the following day, but luckily only by a tiny amount. The closing figure was 2.7912, so there was still plenty to celebrate so far. The question was whether we could hang onto our gains for the week as a whole.
We managed to keep things moving in our direction on Thursday as the exchange rate steadied itself at 2.7941. Did this mean the pound would still have the upper hand as the week came to a close the following day? If there is one thing we have come to learn with the New Zealand dollar, it is that you cannot expect anything to be the norm.
And in fact Friday panned out to be the day we really wanted – with a huge leap up for the pound. By the close of play the pound was claiming 2.8328 New Zealand dollars. That meant we had gained a total of just over eight cents during the week – making it stand out among a week of not so good results and giving us something to celebrate.
Finally we move on to Australia, as we always do. Last time we saw a loss that left us on 2.1946, so we would have to wait and see what this week would bring. And once again the first day didn't give us a lot to get our teeth into; we finished on an exchange rate of 2.1936. This represented a slight drop but nothing to get too worried about.
But that's when the real change happened, as we saw the very next day. By the end of Tuesday's trading the pound was claiming 2.2313 Australian dollars – registering a jump up of over three and a half cents in twenty four hours. The following day saw a small drop once more, but not enough to concern ourselves with given the big rise of the previous day. Wednesday's ending figure was 2.2299.
We slipped back again on Thursday to 2.2211, but it was almost as if the pound had a plan to follow the whole way through. Because when the markets closed for the week on Friday, we were left with an exchange rate of 2.2413. That meant we had gained nearly five cents over the week as a whole – giving us another resounding result to celebrate.
So in the end it was a mixed bag – but where we had a success we really made the most of it.
We've seen how well the pound did against these two currencies last week, but how did they perform against each other?
Well in truth there was very little to separate them. The New Zealand dollar claimed 0.7964 Aussie dollars on the close of Monday's trading, and by Friday it had slipped slightly to let the Aussie dollar back in. The final rate for that day was 0.7912.
Uncertain times in Europe meant that the US dollar was looking rosy again last week. It seems that the dollar is looking better than the Euro at present, as people try and limit the damages they are experiencing from buying currencies affected more heavily by the global recession.
The Euro has been feeling the effects of the worsening recession this week. The currency is no doubt going to experience tougher times ahead as well – but could it mean that the pressure on the pound eases as a result?
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So here we are at the close of another week in the world of currency. It's not been too bad a week either – no major losses, as far as the pound is concerned. But what will the next week bring?
Rest assured we will be here as normal to find out. We'll see you then.