Posted by Allison on 24 March 2009, 10:20
It seems as if it has been a long time since we have been able to say that we had a very good week last time we reported on how the pound was doing. In fact, if you recall our last report you will know that it reported on gains against all the major currencies we looked at. Even the US dollar and the Euro couldn't stand up against the British pound during the week of 26th January to 1st February.
The question now though is whether those results represented a new future for the pound. Somehow it seems very unlikely that we have already witnessed the turnaround that will gradually lead us back to a stronger and meaner pound. The recession is in full swing and the news that is constantly coming out of Britain is far from being good.
This means we can indeed expect the pound to slip back and relinquish some of the gains we saw it make recently. The real question is whether that will happen this week, or whether it will happen further into the future. We doubt that the pound will get stronger any time soon, so it really depends more on which currency has the most strength in any one week rather than anything else.
Some people seem to be easing off on the idea of a foreign holiday at the moment though. No matter which currency converter you use, the figures are far from being encouraging. It's often cheaper to stay in your own country rather than trying to exchange the pound for anything abroad.
So with that thought in mind, let's see whether a foreign holiday would be advisable or not at the moment.
Our first stop as always is America. We gained nearly six and a half cents over the dollar last week, but although that might seem like a good result we'd already lost double that amount the week before. Could we now regain the rest of that deficit though?
We had a starting point of 1.4274 this time around, and any movement towards the $1.50 mark would be very welcome indeed. So let's see what actually happened.
As things turned out we didn't get off to the best start last week. By the time the markets had closed on the first day back after the weekend, the pound was claiming 1.4125 US dollars. So it had already slipped by some one and a half cents. Was this the start of a bigger slide, or would we be able to reverse things?
The latter seemed to be true once we had gone through an active day's worth of trading on Tuesday. By then the exchange rate had crept up slightly to cancel out most of the loss of Monday – leaving us on 1.4230. Was this to be the start of a fight back by the pound?
The result we saw on Wednesday certainly made it seem that way. The exchange rate pushed back in our favour again and we were looking at a rate of 1.4400 by the end of the day. Could we indeed get further towards that $1.50 mark by the time Friday evening came and the markets closed for the week?
There were two days to go now. Thursday did indeed bring more good news as well, and it was a sizeable leap for the pound as it finished on 1.4611. That meant we had managed to gain back over two cents in just twenty four hours. There was still a long way to go to reach that $1.50 level though, and with just one day to go it seemed unlikely that we would get that far ahead.
And of course we didn't quite manage it. We did still get another increase in the exchange rate that went in our favour, but it wasn't as big as the one we enjoyed on Thursday. In fact it was less than a cent, but it still meant we finished on 1.4697 for the week. That equated to an increase of 0.0423 over the course of the week, gaining back a little more of the thirteen cents we'd dropped a couple of weeks ago.
This had to be good news, as it is the second week in a row that we have had a significant gain against the US dollar. After some of the horrendous losses we've seen recently, we can take this as a success. The only question is how long we can keep it going.
So let's take a look overseas now and hop across into Euroland. Once again we'd had a good week there last week – we enjoyed a gain of 0.0484 Eurocents all in all. So could we repeat the exercise as we had in America and net another increase this time as well?
Let's see what happened. The starting point was 1.1137, and by the time the markets closed after an active Monday, the exchange rate stood at 1.1069. So that wasn't the best start, but having said that the situation did mirror the one in the US. We lost a small amount there on the first day of the week, and from there it was up and improving all the way.
Tuesday saw the smallest increase possible from that stage, as the exchange rate crept up to 1.1075. But from that point we made a bit more progress and managed to up things a little more the next day too – finishing up on 1.1234. Was this the start of a nice increase that would repeat the result we saw in the US?
It certainly seemed to be, because the following day brought another good result. We weren't seeing quite the increases that we'd seen in the US, but another jump up to 1.1389 on Thursday was more than welcome. Could we finish the week on another good note and make sure that we could increase our position a bit more?
As it turned out that is exactly what we could do. By the time the markets closed on Friday and we quit for the week, the exchange rate between the British pound and the Euro stood at 1.1486. This meant we had increased the value by nearly three and a half Eurocents over the course of the week. And once again we had managed to pull further away from the point of parity, where one pound would be worth one Euro. The further we can move away from that point the better, so let's hope this move ahead can continue for the next few weeks.
We'd seen another good result in Hong Kong the previous week, as we claimed 11.070 Hong Kong dollars to the pound by the close of play. So from that starting point we were hoping once more to up the figures in our favour.
You might have been able to predict this, given the results we have shared with you so far, but Monday's result wasn't a good one. By the end of the day the exchange rate had dropped back to 10.954. So once again we had that pattern of a slight loss on the first day of the week. From this point forward we'd seen increases against the US dollar and the Euro, so would we now see a nice increase against the Hong Kong dollar as well? It would certainly be very much welcomed if we did.
Tuesday settled into that pattern nicely, as by the end of the day the pound was claiming 11.034 Hong Kong dollars. Could it continue in this vein and produce the results we were looking for?
The answer appeared to be yes. The following day finished on 11.166, bringing a steady increase of 0.132 since the previous day. The real question now was whether we could continue to produce increases in that exchange rate to close out the last couple of days of the week.
Well the news looked good. Thursday brought another increase of 0.163, bringing the exchange rate up to 11.329. And the final day of the week didn't let us down either. The increase to close out the week brought us up to 11.397, meaning we had pushed forward once more and gained a total of 0.327 all in all. This was certainly turning out to be a wonderful week for the pound – and not the first one in a row either.
Let's see how things went in New Zealand now, where we had an amazing week the previous week. That time we'd actually managed to get ahead by almost nineteen and a half cents! It might therefore seem a little greedy to try and hope for another increase this week, but given the results we've seen elsewhere could we indeed hope for that outcome?
2.8142 was the starting point as we got out of the gates this time around, and by the time the markets closed at the end of Monday, we had pushed things a little in our favour. The closing exchange rate was 2.8267, giving us a nominal increase.
Things dropped back a little the next day though, as we lost ground to finish on 2.8151. So this alone did not repeat the pattern we'd seen in other countries. What could we expect to see next then?
Wednesday gave us the answer, which turned out to be a nice little increase of three cents. At the close of trading the exchange rate stood at 2.8451. We pushed things up a little more the next day too, to 2.8511, but it was becoming clear that we could not hope for a great result in this country this time around. However after the huge increase of the previous week this was perhaps to be expected.
And in fact we lost some ground the following day, as we closed out the week against the New Zealand dollar to finish on 2.8352. All in all that meant we had increased our exchange rate, but only slightly by 0.021 over the week as a whole. Given the fact that it had been something of an up and down week against the New Zealand dollar, this was once again something to be celebrated.
Finally we stop off in Australia to see if the story against the New Zealand dollar could be repeated here. We have seen in the past that the two currencies can have similar results against the pound, so would that prove to be the case this week?
Our standing start was 2.2403, having gained nearly thirteen cents the previous week. And there was little change by the time the first day of the week was over, with the exchange rate standing at 2.2491. Slightly up for us then, but not by that much.
We then saw a notable slip the following day, when the pound lost some ground and ended on 2.2276. Did this mean the Australian dollar would have the upper ground here and finish up with a better rate for the week as a whole?
As it happened the pound got the upper hand the next day, as it finished on 2.2476. This was turning into a real up and down week, just as we had seen in New Zealand. We had gained a little there overall, so could we do the same here or would the Aussie dollar win the day?
Thursday saw another win for us as the pound finished by claiming 2.2519 Aussie dollars. But that didn't mean the battle was over, because by Friday night the exchange rate stood at 2.2291 – a significant dip on the final day of the week that meant the pound had lost a little over a cent over the week as a whole.
But apart from this slight loss it was another great week for the British pound. It will be interesting to see whether the next week or two can continue on this path, or whether we will be deviated from these good results.
The Euro hasn't had a good time of late, falling to much lower levels against the pound. And it hasn't done well against the US dollar either.
From a low point of 0.7782 on the Tuesday of last week, the US dollar finished up by claiming 0.7814 on the Friday night.
Just as many other countries have suffered of late, so Australia and its dollar are having a rough time at the moment.
The economic reports that are spilling out of the country aren't doing its currency any good. And while other countries have already gone through this negative process, it seems as if Australia is one of the countries that is suffering the most at the moment.
The Russian rouble and the Euro are both experiencing hard times at the moment. And when you put the two currencies up against each other there is little to choose between them.
The rouble claimed 0.0216 Euros at the start of last week, and that had changed to 0.0215 by Friday. Not much difference at all, as these two struggling currencies go head to head.
The Interchange website is our spotlighted site this week. Available to view at www.interchangefx.co.uk, there are plenty of up to the minute news stories which delve into the exchange rates and what affects them. You'll find it particularly useful if you explore the world of currency exchange.
So there we are for another week. We'll be back as usual next week to see whether the pound has been able to increase its power. We are a long way off from the rates we saw during summer 2008, but the recent results are certainly encouraging.
See you then!