Posted by Allison on 24 March 2009, 09:47
We have seen in previous weeks that the pound has been standing up well against some other major currencies around the world at times, while at others it seems as if nothing can keep it from tumbling. Much of this is due to the various ups and downs in the world economy at the moment, and indeed if we can be sure of anything it is that we will continue to see ups and downs of varying proportions as we check the currency converter to see how far our pound will stretch in various other countries at different times.
So how did the pound fare around the world between the 21st and the 27th? As always in our weekly look at the currency markets, it's time to find out.
The British pound was doing rather well against the US dollar when we last caught up with it, even managing to break through that two dollar barrier at one point. Would we see such heights again this week?
At the end of the previous week the pound finished by claiming 1.9940 US dollars to the pound. Monday 21st saw a slight rise on this and the closing figure for the day moved up slightly to 1.9957 against the dollar. This was great news for Britain but did this mark the beginning of a trend that could possibly be continued for the rest of the week?
Well we certainly had reason to celebrate come the end of Tuesday, because that two dollar barrier was surpassed yet again, bringing us an exchange rate of 2.0060 and making us wonder if this could be another great week for the pound.
The US dollar can never be kept down for very long however, and the very next day it battled back to see the exchange rate go below the two dollar mark again, bringing it down to 1.9996 – not much below the barrier but enough to stop the rise of the pound and indeed we didn't see a return to those two dollar figures for the rest of the week.
By the end of the next day the US dollar had pulled back some more ground, finishing at 1.9869 and making the Brits wonder if it was downhill from here on in for the remainder of the week. There was only one day left to trade and while a two dollar plus exchange rate was probably too much to hope for, it would have been nice to see the British pound regain some of the ground it had previously lost.
And that is what happened. By the close of play on Friday, we were looking at an exchange rate of 1.9946, which was actually slightly up on the exchange rate we saw the previous Friday. So while we experienced some ups and downs last week we did come out on top in the end. The question is whether or not we can continue to pile on the pressure in future weeks, as the dollar still appears to be going through the struggles that have become a part of its existence of late.
So the pound was doing well against the US dollar, but what about its performance against the Euro? Could that be improved upon? Last week we saw that things had changed somewhat from previous weeks – the Euro finally started to struggle and it was up to the pound to make the most of that situation. The real question was whether this was merely a blip, or whether the pound could carry on standing up to the mighty Euro and not come away bruised and battered.
Last week we ended with an exchange rate of 1.2607 Euros to the pound, and Monday saw the Euro claiming first blood with a closing exchange rate of 1.2584 against the pound. Was this an indication of worse to come for the British pound, or was it just a slow start?
Tuesday brought better news as the Euro lost a little ground, and we took advantage of that to finish the day with an exchange rate of 1.2601. Wednesday saw the scales tip even further in our favour, as the pound managed to break through the 1.27 barrier – even if only slightly – and claim 1.2703 Euros to the pound.
That turned out to be the best day to hit the currency converter and work out how much your holiday money would get you in Europe though, as the Euro fought back to bring the exchange rate down to 1.2674 by the end of Thursday. All credit to the British pound though, because it wouldn't let things slide any further than that and it actually brought the exchange rate back up slightly to 1.2677 by the end of the week. This was a full 0.007 more than we closed on the previous week, so that at least was something to celebrate. The pound has come off worst against the Euro in previous weeks so the fact that it was not only doing well but actually doing exceptionally well against the Euro in the last couple of weeks makes us wonder whether this indicates more good news to come.
We shall see.
Hong Kong meanwhile was also not doing very well against the pound in the last couple of weeks, and it finished at 15.550 against the pound last Friday. Would this week bring better news for the Hong Kong dollar, or would the pound be able to continue exerting that pressure?
Well it was the pound that got the first prize of the week, as it finished the first day with an exchange rate of 15.563 against the Hong Kong dollar. Was this an upward trend that would continue, or were we simply seeing the last gain before the dollar came back strongly to claim the upper hand?
As things turned out it got better still for the pound the very next day. Tuesday ended with the pound claiming 15.640 Hong Kong dollars, representing a huge leap from the day before. Surely that couldn't be sustained, but it must have worried anyone dealing in the Hong Kong dollar at that stage.
In fact we saw the very next day that this leap upwards could not be sustained, and the pound weakened against a rising dollar which ended the day on 15.599. Was Tuesday's figure the best that we would see for the entire week, or would things swing back in our favour?
Much to our disappointment (but probably to Hong Kong's relief) the former statement turned out to be true. There was a sharp drop on the 24th which saw the Hong Kong dollar finish the day at 15.496, immediately wiping out a lot of value if you had waited to transfer your pounds into Hong Kong dollars in advance of a holiday in that country.
Friday saw a little better news, although not that much given the huge high of Tuesday, as the pound finished by claiming an exchange rate of 15.555 Hong Kong dollars. This was 0.005 up on the closing figure of the previous week, but as we have seen before the pound often has a marked up and down tussle with the Hong Kong dollar, often seeing huge highs and incredible lows before finishing somewhere more acceptable in the middle.
Elsewhere, how did the New Zealand dollar do when put up against the British pound? 2.6122 was the finishing rate we had last week, so it would be nice to see a little upward movement here.
As it turned out that was exactly what we got. This was far from being a week filled with ups and downs – it was a week where things looked up and stayed that way for the British pound. Monday saw a closing rate of 2.6214 and represented a trend that was set to continue, as the following day that rate had gone up again 2.6307.
But if we were happy with that upward movement, we had only seen the beginning of what would turn out to be a great week for the British pound in Kiwi territory.
The very next day the pound leapt up further to 2.6633, and even that huge jump was eclipsed by Thursday's improvement, which saw the pound climb still further to 2.6799. And the week ended on a good note for us as well, with a closing exchange rate for the week of 2.6824. This made for a great graph as far as the Brits were concerned, and it represented an upward trend of 0.0702 over the previous Friday's finishing line. Needless to say we will be watching this one closely over the next week to see if the New Zealand dollar can find the strength to fight back.
Over in Australia we had seen an exchange rate of 2.0535 last Friday, so we were looking for some upward movement after the highs and lows of that particular week.
Monday brought another low of 2.0463, but Tuesday saw another swing in our favour as the pound claimed 2.0520 for each Australian dollar. This is what we wanted to see, and there was plenty more to come too.
By the close of play on Wednesday the pound was claiming 2.0744 Australian dollars; even though it slipped back to 2.0683 the next day, it turned out to be nothing more than a temporary blip. Friday's closing figure saw us claiming 2.0839 Australian dollars to the pound – a rise of 0.0304 since the same point at the previous week.
Just as the previous week had been a reasonably good one for the British pound, this one seemed to continue that trend. It certainly meant that we didn't have a lot to commiserate about, as we have in recent times. The real question is whether we can keep this performance up.
The Eurozone has been known for looking mighty and untouchable in the past, but it suddenly doesn't seem to be looking the same way.
We have seen that the British pound has been able to stand up to it very well over the last few weeks, and somehow the Euro doesn't seem to have the same vigour that it once did.
Thursday 24th brought fresh news that the Eurozone was struggling, and the phrase 'economic growth' isn't one that you could now associate with that region. This is a time when everyone will be watching to see if the Eurozone shows more signs of falling apart.
As we have seen over the past few weeks it seems that the US dollar has levelled out somewhat. It has certainly had a rough time of it lately, with talk of a recession and even the possibility that the Euro may take over from it as the world's foremost reserve currency.
But it looks as if the dollar is beginning to level out, and may even become more of a force to be reckoned with again. It is certainly advisable to keep a close eye on it over the coming weeks and months, as the economies in other major countries continue to ebb and flow.
We have seen certain currencies ebbing and flowing over recent weeks and indeed that is the signature of the Forex markets. But if you spot a currency that seems to be doing very well, you should hold it up against other currencies to get a better picture of exactly what is going on overall.
As we've discovered already, the British pound did well against the New Zealand dollar last week, but that doesn't mean that everything is wonderful in the UK. Indeed the British economy is struggling in a big way at the moment.
New Zealand did well against other currencies but in truth it can sometimes be a case of one currency managing to hold on better than another one. It's really a case of bad and even worse at times.
If you deal in currency – or are thinking of doing so – then you need to have a good website that you can rely on to give you the information you need. Having access to a good currency converter is even more important, and you can find that at www.oanda.com.
The amount of information on currency trading and exchange rates here is staggering, and it will certainly provide you with a good and reliable place to go while you are waiting for our latest weekly round up of news and views. Watch out for the real time currency exchange rates in particular, which are accessible from the home page.
So until next week, keep track of events and we'll see whether we have anything to celebrate as far as the British pound is concerned in a few days from now.