Posted by Allison on 24 March 2009, 10:19
If there was one thing that made the previous week memorable, it was this – the pound, which had looked weaker anyway, looked weaker still by the time the markets closed back on the 23rd January.
There was more than a little concern that the pound was in freefall, and some were wondering just how much lower the currency could go. While it may still be winter at the moment, many people are looking at what their currency converters are telling them and abandoning all hope of a holiday abroad. The best we can hope for at present is a break somewhere in the UK – where our cash is bound to go somewhat further.
So it was clear what we were looking for this week in our round up of the currency markets. We wanted to see better results than the week before, even if they weren't all that much better. Any kind of improvement would bring us back near to the $1.50 US dollar rate that we wanted to see once more.
But did we get what we wanted? Or are the figures we are about to reveal to you going to be even worse than before? There's only one way to find out, and that's to keep reading.
So firstly we head over to America to see whether we could stop the slide that the pound went on with a vengeance the week before. This was actually quite alarming as we'd ended up on 1.3630 by the close of play on the previous Friday. That was much too low for our liking, but could we pull things back in our favour again?
Monday got the week off to a good start fortunately, with a closing figure of 1.3826 to ponder over. But was it too soon to breathe a sigh of relief? Was this the start of a good week to come, or were we seeing what could amount to a false sense of hope?
Tuesday gave us more reason not to be cynical and to relax – even if only a little. Because by the time trading had finished on the second day of the week the exchange rate between the two currencies stood at $1.4086 for every pound you had. That was another significant improvement, and we could only hope now that it continued to go upwards rather than sliding back down again.
What would Wednesday bring? Well, once again it was a sizeable jump up to 1.4300 – an improvement of more than two cents in just twenty four hours. After the amount we had lost the previous week, it was certainly something to celebrate.
Thursday actually brought the very first slip of the week, but thankfully it was only a relatively small one. By the end of trading on the penultimate day of the week we were looking at an exchange rate of 1.4293 – just 0.0007 down over the previous day. That was acceptable, although we'd still have preferred an increase.
Unfortunately we had another tiny slip on Friday too, closing out the week on 1.4274. But all in all this was a successful week – especially given the disaster we had to witness the week before. By the time we had finished, we'd regained a total of 0.0644 cents over the American dollar. This actually meant we had got back just half of the losses of the previous week, so it was not perhaps quite as big a success as we could have had. But all in all it was enough of a difference to warrant a celebration.
It's worth wondering what will happen next week though. Ideally we will regain the other six and a half cents to get us back at the same position we were in two weeks previously. But in reality we are just as likely to drop back and lose more ground again. We'll just have to wait and see.
Onto Europe now then, where we had lost six Eurocents the week before. The exchange rate we started last week with then was 1.0653. This was still a short distance away from reaching the point of parity – but not so far away that you couldn't still see that possibility.
So did we get off to a good start in Europe as we did in America? Actually the answer was unfortunately no, although we didn't slide back by much. The end of that first day of trading on Monday saw us finish on 1.0643 against the Euro. Hopefully we could now start to turn things around… but was that what actually happened?
Actually it was, albeit in a very tiny way. Tuesday saw some brisk trading that resulted in the British pound being able to push back a little and exert some authority – albeit of the weakened kind. By the end of the day the figure we were looking at was 1.0692. This was barely half a cent up on the day before, but it was an improvement.
And as it turned out it was an omen of good things to come. Wednesday would turn out to be the day when everything changed, and we could add to the good result we had seen in America. By the time the markets closed at the mid-week point, we saw an exchange rate that had gone up in our favour to 1.0784. Now that isn't even a whole cent worth of improvement, but it was good enough to wonder what the rest of the week would bring.
Onto Thursday now, when we did manage to bolster the pound by more than a whole cent against the Euro. The Europeans can't have been too happy about what was happening, and with an exchange rate of 1.0902 by the end of the day, they must have been hoping for a late burst of energy from the Euro to reset the balance.
But luckily for the British pound they didn't get it. Because when trading ended on the Friday evening and everyone headed home to ponder on the latest developments, the pound stood at 1.1137. That meant that over the course of the week we had managed to pull back 0.0484 Eurocents. That didn't quite get back all of the losses of the previous week (they totalled 0.0591in all) but it was good enough – and it was a good result.
One thing we need to remember is that many other countries are having as tough a time as we are here in Britain. This means we can expect plenty of fluctuations back and forth with the exchange rates in the near future.
Let's move away from Europe and head over to Hong Kong now. Here we had a significant loss the previous week which left us on 10.571. The question now was whether we could pull another good result out of the bag or not? Quite often we see a result repeated across the board – either good or bad. So would it happen this time?
Well we certainly started off on the right foot, with a closing exchange rate on that first day of 10.727. This increase of 0.156 was significant enough in just one day to make us wonder whether this too would go in our favour.
Tuesday brought more good news and another move towards getting back into 11.0 territory too. By the time the markets closed on the second day of the week we were looking at an exchange rate of 10.930. The following day would be the day we got back over that particular threshold, as we finished with a flourish on 11.095. The only question now was whether we could hold onto that improvement long enough to make it count.
We slipped back slightly on Thursday to 11.087, but we were still within sight of the end of the week. And we had every reason to hope that we would at least stay on 11.0 territory for the remainder of the week too.
And indeed we did. By the end of the week the pound was worth 11.070 against the Hong Kong dollar. That meant we'd increased our exchange rate by 0.499. So yet again we didn't manage to claw back all our losses from the previous week, but we had headed in the right direction and at least recouped some of them.
In New Zealand during that woeful week we had lost 0.0995 cents against the New Zealand dollar. We're used to a bit of a see saw tussle against this currency, so what could we do this time?
From a standing start of 2.6197, we upped things slightly to 2.6206 on the first day of the week. But things didn't really start to get interesting until the following day, when we finished on 2.6648. That's an increase of nearly four and a half cents overnight. Could we keep this performance going?
Indeed we could. Wednesday saw another great performance by the British pound, claiming 2.6987 New Zealand dollars by the close of play. And if that wasn't enough, we were clearly going in for the kill for the two days that were left to us this week.
Thursday finished on an even better note, with a final total of 2.7575. If we hadn't already seen it happen before we would have thought this was the total of what we could expect to achieve. But of course – thankfully – there was still more to come.
And in fact we managed to finish on 2.8142 – making a grand total increase over the entire week of 0.1945 cents. So we effectively got back double what we had lost the week before. And that was plenty good enough for us!
Onto Australia now, to see if we could possibly repeat that feat. We'd lost nine cents and finished on 2.1131 before, so we had everything to gain back.
The news we got on Monday wasn't the best start, as we dropped back to 2.1046. But that was the sum total of the bad news. From then on we had good news every day – starting with a closing rate of 2.1261 on Tuesday.
From there we climbed up to 2.1369 the following day, and while that wasn't too big an increase we felt there was more still to come. And there was – Thursday had a bigger jump saved up, to 2.1741, but the best was reserved for the final day of the week, when we finished on an impressive 2.2403. That meant we had gained back 0.1272 in total – more than getting back the losses of the previous week.
So it was a good week in which we didn't see any losses at all; and in fact, all the gains were very good ones. Let's hope we can continue this in future.
There wasn't much to choose between them, but from a starting point of 0.8030 last week, the New Zealand dollar slipped back to 0.7884 on Thursday. It then regained a little to close on 0.7960 for the week.
It may have dropped back to 0.7541 at the midweek point last week, but the US dollar proved it can still take on the Euro and win.
By Friday's close of trading it was claiming 0.7802 Euros to the dollar – but will it last?
The recent relatively strong showing by the US dollar just goes to show that people still regard it as a safe currency to buy in times of trouble.
It remains to be seen whether that will still be the case in the future, but for now it seems quite strong.
So here we are at the end of another weekly report. To find out if sterling does as well next week, you know where to come don't you?
See you then.