Posted by Allison on 24 March 2009, 09:45
If you were using your currency converter to work out how far your pound would have gone last week, you would have had a pretty good week. It did pretty well against several other major currencies, showing that it had managed to find some strength in a climate that was certainly extremely testing.
You obviously have to take each day as it comes and if you have a holiday planned in any area of the world in the coming weeks, take a look at how the currency you will be buying has been performing against the pound and try to gauge when the best time would be to actually buy that currency.
The same goes for Forex trading; this is definitely an area where you need to know the slightest changes in any currency – up or down – and the more you know the more likely it is that you will be able to make the profits you seek.
So let's take a look at last week's figures and see how things stand in the market at the moment.
As we said, the week before was a pretty good week all told for the British pound, but could it keep up the pressure and continue to give us something to celebrate?
So in last week's report we revealed that the pound had finished at 1.9816 US dollars. That wasn't too bad given the fact that recent weeks had seen a real tussle with the American currency, and the pound was looking to regain any strength it could.
On the 7th July the pound finished somewhat lower than this at 1.9654 against the dollar, signifying quite a drop since the previous Friday. Did this mark the start of a bad week, or could the pound recover and get back to the 1.98 mark it had finished the previous week on?
Tuesday saw a slight improvement which gave us cause for hope, because the pound managed to claw its way back into 1.97 territory, finishing on 1.9746 for the day. Wednesday saw a slight decline though as it slipped back slightly to 1.9728 against the dollar. The question at this midweek point was whether the trend now would be to continue its downward spiral again or regain a little strength and push back up.
Luckily for us – but not so lucky for the Americans – it went in our favour and we closed on Thursday with a pound that claimed 1.9742 against the American dollar. What's more it managed to keep that up by pushing to end the week even higher, at 1.9814 US dollars. This was only 0.0002 less than it had finished the week before, so all in all we had something to celebrate in that the pound was still holding its own and capable of recovering against short term gains on the side of the dollar.
Elsewhere the pound had some work to do against the Euro once again, where it finished at 1.2645 against the Euro last week and was eager to regain some higher ground if at all possible. Could it do it?
Monday saw a finishing exchange rate of 1.2558 against the Euro, representing a slip which the Brits certainly hoped wasn't going to last. Holidays in Europe have been getting rather expensive of late and it was essential that the pound continued to keep the pressure on if it could, to enable thousands of holidaymakers to get the best deal for their money.
Tuesday saw the pound managing to claw back a bit of ground, but only a tiny amount as the exchange rate crept up to 1.2588, and unfortunately there was more bad news to come on Wednesday as the Euro seemed to regain a little of its previous power and determination. This wasn't shaping up to be a good week for the pound as Wednesday's tussle finished at 1.2554.
The pound fought back and managed to finish at 1.2568 against the Euro on Thursday, but the week finished as it had begun – as a struggle that was obviously not going to be over any time soon. The exchange rate of 1.2513 was recorded at close of play on Friday, leaving the Brits to wonder whether the Euro was getting the better of the pound, or whether we could look forward to a better week next week.
As we saw in our previous report, the Hong Kong dollar had plenty to celebrate as it came out on top of the pound, but was last week any different? Could the dollar keep up its performance or would the pound fight back?
15.453 was the final exchange rate going into last week, and by the end of the Monday it was clear that the momentum was still with the Hong Kong dollar, as it finished at 15.331 against the pound. Was it going to be another week of doom and gloom for us?
As it turned out, this was a momentary blip in what would eventually be a week to celebrate. Tuesday saw a closing exchange rate of 15.402 against the dollar, and the only question now was whether the pound could continue to push upwards and give this mighty currency a run for its money.
By the end of Wednesday the exchange rate stood at 15.392 so it seemed as if we had our answer. But while the pound may have been down it certainly wasn't out, because it climbed back up to finish at 15.403 on Thursday. And there was more good news to come because the pound managed to push forward a little more and finish at 15.462 for the week, recording a big increase since Monday and exerting more pressure on the Hong Kong dollar.
Elsewhere in the world the pound had a mixed week against the New Zealand dollar the previous week, finishing on 2.6167 on the Friday evening. As it turned out last week wasn't going to be anything spectacular, as the exchange rate finished at 2.6096 on Monday and left everyone wondering which currency was going to make it out on top by the time Friday came.
Tuesday saw a leap in favour of the pound, as it finished at 2.6320 at the end of the day. But was this a temporary shift in favour of the pound or was there going to be a fight back from the New Zealand dollar?
Wednesday gave us the answer as the exchange rate slipped back to 2.6155, and by Thursday the answer of who would win this tussle for the week looked to have been answered already, as the pound could only claim 2.6059 New Zealand dollars. It limped home on Friday with a rate of just 2.6047. Now the question is what will happen next week?
Over in Australia there was plenty to get our teeth into, as it was something of a topsy turvy week for the pound down under. The previous week saw the pound finish by claiming 2.0586 Australian dollars to the pound, so a good start to the week would be good here. Did we get it?
Monday finished with an exchange rate of 2.0548, which signified a slight drop compared to the end of the week before, leaving us wondering whether the Aussie dollar would win the day this week.
But the pound wasn't having any of it, as Tuesday finished with a resounding 2.0740 exchange rate as the pound fought back. It wasn't a momentary rise either because it kept up the pressure the next day by staying in the 2.07 region, claiming an exchange rate of 2.0716 against the dollar.
Unfortunately for us that was the limit of our rise against the Australian dollar – at least for last week. By close of play on Thursday the pound had fallen to an exchange rate of 2.0558 against it, and Friday saw the week end slightly lower on 2.0550.
So as far as the pound's performance against a raft of other major currencies was concerned, there was no major success last week. Any gains were short lived and we can only hope that the pound will regain some of the strength it has seen in other weeks in time to come.
As we know there are many events that can have an effect on exchange rates and how certain currencies perform in the world each day, and the news concerning falling sales in the UK certainly won't have helped the pound last week.
Marks and Spencer was just one of the big name firms to suffer last week, and the chances are it won't be the last.
Mortgage companies in the US felt the pinch last week as shares fell and caused the dollar to suffer as a result. But the dollar is also feeling the pressure from other areas as well, all thanks to the current instability of the market.
A lot of people still look towards the US dollar as a kind of barometer though, giving us an idea of what may happen in other areas of the world, and as the world's reserve currency this is perhaps not surprising.
Everyone was wondering whether South Korea would keep their interest rates the same ahead of last Thursday's decision, which indeed they did.
South Korea is fighting the same battle against inflation that many other countries in the world currently are, and it is likely that a change in interest rate would not have helped in this area. The question is, will those rates be able to stay the same for the foreseeable future?
Unsurprisingly it was certainly an interesting week. It is perhaps to be expected that any gains the pound makes against other currencies will only be short lived ones, because the nature of the currency market at the moment means that it is reacting to the many and varied events that are going on in the world.
In truth everyone is concerned about interest rates, rising prices, a struggling housing market and much more besides, and this isn't only unique to the UK. Many other countries are experiencing similar problems and this is why the gains and losses of particular currencies are experienced on a daily basis as people react to the latest news that affects the currency markets.
If you need to stay up to date with what is going on in the world on a daily basis, you should try the website www.cnbc.com. This has a specific section which concentrates on currencies and what they are doing (whether it is good news or bad) and it has a search facility which allows you to find specific currency related stories to read. Although it is an American site it has a global view and this is undoubtedly one of the reasons that it is so highly trafficked.
But for now we should look forward to next week to wonder what we shall be reporting then. It almost seems as if we are viewing the world of currency under a high powered microscope at the moment, and the result is that the gains and losses that the British pound is making almost seem even more important as a result.
Of course we know that every piece of news can have an effect on the currency markets and on what results we would get if we decided to make a specific trade to make money, but as we have seen with the results of the exchange rate between the pound and the Australian dollar (not to mention many other currencies besides) we must be ready to sell as quickly as possible when our luck turns against us. This is because the changes can be extremely swift when they happen.
So that's all for this week, and we'll be back here as usual next week to see whether the pound is any stronger, holding its own or taking another nosedive. As it stands at the moment – who can tell?