Posted by Allison on 24 March 2009, 10:17
So we are now well into the New Year as far as the financial markets are concerned. And this week in particular we have every right to be excited about what we could be seeing in the way of results. Last time we got a selection of very good figures as far as the British pound was concerned, as it came out on top of several major currencies.
Have you been checking your currency converter over the past week, taking a look at how the markets have been shaping up? If you have then you may well be aware of what has been going on already. But if not, don't worry because we have taken a look at all the major results and exchange rates for that week, so you won't be missing out on anything.
Even though the previous week saw great results as far as the British pound was concerned, there is no doubt that we cannot automatically expect this to happen two weeks running. We have seen this happen before, only for all those gains to be wiped out the following week.
So with that in mind, let's see what really happened between the 12th and the 18th of January.
We start as usual with a look at the performance the pound put up against the US dollar. Last time we finished on an exchange rate of 1.5292, after having gained a total of 0.0864 during that single week. What would happen next? Could we maintain this performance?
Well after that good figure we finished on, we lost a lot of ground immediately on the first day back the following week. By the time the markets had finished trading on the Monday, we were left with an exchange rate against the US dollar of 1.4955. Dipping back below the $1.50 mark again certainly wasn't good news, but was this an omen of bad things to come, or could we pull back and turn the week into another good one?
As far as Tuesday was concerned the answer appeared to be a definite no. By the time we had finished our battles on that day, the exchange rate had slid down even further. This time we were finishing on 1.4554. That equates to a loss of 0.0738 in the equivalent of just forty eight hours. And what's more, that is also very nearly all the gains we had made the previous week, wiped out already.
The question now was whether or not we could regain them before the week was out. Somehow we didn't have a good feeling about it, but let's see what actually happened.
Wednesday finished up with a figure that had stalled the downward momentum, but we still had a minor loss that day. By the time everyone went home we had finished the day on 1.4502. What would happen in the remaining two days still to come?
There was a slight improvement on Thursday, with the closing exchange rate rising ever so slightly to 1.4594, but it seemed too much to hope for that we could repair all that damage in a single day now.
And we were right. Even though we did pull back considerably to 1.4921 on Friday, gaining 0.0327 overnight, it wasn't enough to repair all the damage that had been done.
So we finished this second full week of the New Year down against the US dollar by 0.0371 compared to the previous week. The best we could take from this is that we hadn't lost everything we had gained before.
This isn't the most auspicious of starts to the week's data though. Given that we gained against virtually every currency last time, it now makes us wonder whether we were destined to lose those gains (or at least some of them) against every currency this time around. With that thought in mind, let's move on and see what happened against the Euro.
We were up by 0.077 on the Euro the week before, so what happened last week? We closed on 1.1175, so it would have been good to move away from the prospect of parity even more this time, instead of slipping back towards it even more.
Monday was rather interesting, since it actually didn't bring any real change. If we were fearful of a major dip after our result with the US dollar, we didn't get it here - at least not immediately. By the close of trading on that first day we were left with an exchange rate of 1.1165 – just 0.001 down on the closing figure of the previous week.
However the next day didn't bring such good news. By the end of the day we were down to 1.0974 – did that mean the slow slide towards a loss for the week had started? If it did, then at least the loss today was relatively small. Now it would depend on how much lower it went (if at all), and which currency would prove to be the stronger one.
So as things turned out, Wednesday would prove to be something of a surprise. If we were expecting the pound to slide even further against the Euro, again wiping out much of the good work seen the week before, we didn't get what we thought we would.
By the end of the day the exchange rate had gone in our favour, instead of Europe's, as we finished on a figure of 1.1009. It was only a small increase, but anything other than a loss for us was perfectly acceptable.
And things continued to climb the following day too, as we grabbed a closing figure of 1.1153 against the Euro. Could we maintain our position of strength and push up a little further to finish Friday on a higher figure than we had done the week before?
As it happens we could. By the time trading ended and everyone headed home to reflect over the weekend, the exchange rate between the British pound and the Euro stood at 1.1244 – giving us a slight rise of 0.0079 over the week as a whole.
This was turning into an interesting week, so let's see which way Hong Kong went in terms of the exchange rate against the pound. Last time we finished on 11.862 with an increase of 0.679 during the week, so we were looking to improve on that.
Monday didn't look good though, since by the end of the day we had slipped back to an exchange rate of 11.597. That's quite a loss on the first day of the week, and it meant we had a lot of ground to make up. Could we do it?
Tuesday didn't give us any better news, as the figure we ended up with at the close of play was 11.287. Would this be a week where the exchange rate slid back, only to right itself on the Friday? It may follow that pattern, as there was a further fall on Wednesday, this time down to 11.249.
On Thursday things were on the up again, with an improved figure of 11.326 by the end of the day. But even though we were able to push the figure higher by the end of trading on Friday, to 11.578, this didn't replace all of the earlier losses of the week.
So even though we had increased our results on the whole, the early losses meant we had dropped back by a total of 0.284 since the week before. It seems that Hong Kong was going to be the first result of the week that didn't go in our favour.
On now to New Zealand, a country where you can never quite tell what is going to happen. And it doesn't matter what might be happening elsewhere either, because New Zealand can produce some interesting results.
We gained over nine cents against the New Zealand dollar last week, finishing up with an exchange rate of 2.5882. So what could we do this time round?
As it happened, the answer would be quite a lot. Monday got us off to a lacklustre start though, and by the end of the day we were at 2.5796. If we thought that was the beginning of a slide though, we were wrong. Tuesday saw us finish up on 2.6335, and the quest to get another good result for the week was on.
The midweek point saw another good climb against the New Zealand dollar, which was obviously having a slow week. We managed to end on 2.6711 that day, but there was still more to come after that. The pound was clearly on a roll, and it wanted to prove that against this currency at least, it could get a good result when needed.
Thursday saw another big jump in our favour, and by the close of trading that day we were standing at 2.7191 New Zealand dollars to the pound. Even though Friday saw just about the smallest increase possible, at 2.7192, it didn't really matter. By this point we had already gained over thirteen cents against the New Zealand dollar, making this another week to celebrate for the British pound.
And finally we have Australia. We saw massive gains here too the week before – more than nine cents in total – and a closing exchange rate of 2.1648. And once again the week got off to a good start, with Monday's final rate finishing on 2.1748. Could we repeat the success we had seen in New Zealand?
Tuesday brought another slight increase to 2.1810, so we weren't seeing huge increases yet, and when Wednesday saw a slide back to 2.1764 it made us wonder whether we would get the results we really wanted at all.
Thursday brought much better news though, as we managed to increase our standing to 2.2103. Could we hold onto this and finish the week with a flourish though?
Well we did slip back slightly, but only a little to 2.2052, meaning we had got another good result to add to the ones we already had. Over the course of the week we had increased our exchange rate against the Aussie dollar by a little over four cents. Not as much as New Zealand, but very good nonetheless.
So it was a pretty good week all in all for the British pound – which makes two in a row. What will happen next week? Join us to find out.
From a starting point of 1.4542 at the end of Monday, the US dollar managed slight gains against the Aussie dollar too last week.
It peaked at 1.5145 on Thursday, before dropping back to close the week on 1.4778. The US dollar is clearly still a force to be reckoned with.
The Russian rouble carried on its task of devaluation last week, giving it a weak performance in the currency markets.
This was to be expected, but the US dollar claimed a very low amount of 31.059 Russian roubles on Monday at closing time. The Euro also saw similar low figures.
The UK has done it already, and now it's the turn of the Eurozone. Interest rate cuts are widely being taken to try and make the current situation easier to negotiate, but the Eurozone is struggling to know what cuts to make and when.
Stay tuned to see how this affects the strength of their currency…
There are plenty of brokers around who will help you with your currency needs. But not all of them have their own blogs.
Toby Fischer is an exception though, so visit his blog at http://www.euros-pounds-currency-news.blogspot.com/ to find out the latest news about all kinds of currencies and their exchange rates. This is a good site and his knowledge is clearly displayed for you to take advantage of.
So here we are at the end of another week. Will we see better results for the pound again next time? After two good weeks it would be even better to see those results improve once more, so stay tuned and come back next week to find out more.
See you then.