Posted by Allison on 30 June 2009, 11:05
Welcome back to another week of ups and downs in the currency markets. Although we should say that things were pretty good when we took a look at recent results last week – it was only the New Zealand dollar that made life hard for the British pound.
Some would say that the week wasn’t that successful though, since we ended up with only very small increases against some of the other currencies. But we reckon that even a tiny increase is better than nothing, and it certainly makes for better reading when you are looking at your currency converter and hoping for a good result.
So where will we be this time around we wonder? The pound has shown some increased strength lately, and while we wouldn’t celebrate a much strengthened pound it has made progress. Remember too that we look at the performance of the pound against five major currencies around the world, so any result of an upward nature – however small it may be – has to be a good one, doesn’t it?
While some people think the pound is enjoying a long climb back to where it was around a year ago, we would be slightly more cautious of saying such a thing. After all, a small increase in the exchange rates is not the same as a huge leap upwards. With that said though, if those small increases keep on coming week on week, then we might have something to celebrate.
But for now let’s see what happened last week, when the pound once again went up against those other major currencies to see whether it could gain some more ground. Shall we see whether it managed it or not?
Okay, so here we go with a fresh look at how the British pound did against the US dollar for the above dates. There was very little difference last time around, with the pound managing to up things by just a minimal 0.0044. Still, that was better than dropping down, so could we manage to up things again this time?
Let’s find out what actually happened. It was all set to be an interesting week, but we won’t spoil the ending for you.
We were starting from an exchange rate of 1.6445, and by the time the markets closed on Monday night that had changed marginally to 1.6447. Was this going to be another week of small gains and losses for the pound? We could put up with that, but we wanted it to go in our favour as well if it was going to turn out in that way!
Tuesday dawned and the markets got back to work. But this wasn’t going to be as good a day for the pound. The change in the exchange rate between the British pound and the US dollar was bigger today, but it went in favour of the dollar this time. The closing rate for the day was 1.6303 – meaning the US dollar had upped the pace by quite a bit. We’d lost out on nearly a cent and a half overnight this time.
That didn’t bode well for the rest of the week, but could we do better and make up some ground on the very next day?
As it happened we could – but the amount we managed to add back on to our exchange rate might come as a surprise. By the close of play when everyone headed home we were on 1.6518. So we had soared back past what we had finished on on Monday, and at the same time we had surpassed the closing rate of the week before! We’d added on over two cents this time – putting back all the previous day’s losses and adding a bit more on too for good measure.
So we had two days of trading left to go. Could we add to the good result of the day before, or were the early signs that this could be an up and down week going to pan out for what remained of it?
It turned out that the latter was true, because the closing exchange rate for the penultimate day of the week was 1.6271. Ouch – we’d now lost out on all the gains we’d made the previous day.
But we’d gone up and down with a regularity we could almost predict by now – and that meant we should be on course for an improvement the following day. That would be the last day of the week. But did we get it?
Actually we did! We finished up on an even 1.6500 by the close of play, meaning that we had added on just over half a cent overall. Not too bad really, considering the territory we’d covered during the week.
So onto the Euro now, to see whether we could add on some value there as well. Last time we finished on 1.1804 after adding a cent onto the exchange rate over the course of the week. Could we add the same this time around as well?
Monday started promisingly as we finished on 1.1868 for the day. Not a huge improvement but anything is welcome. The question was whether we could keep going in the same direction. And on Tuesday the uncertain answer came back at us – we may not be able to keep going as we would like. We finished on 1.1663 on that day, having lost out on over two Eurocents overnight. Could we stop the rot and get back on an even keel as Wednesday came to a close?
Let’s see what happened. The pound certainly did put in some more effort but it wasn’t enough to add back all the losses of the previous day. By the time Wednesday was over we were on 1.1774. Not bad, but perhaps it could have been better?
Just two days to go now, and as it turned out Thursday didn’t bode well either. We didn’t seem to have what it took to take on the Euro last week, and by the time the fourth day of the week came to an end we had slid back to 1.1672. The only question left to ask now was whether we could claw back any of our losses to at least finish the week on a reasonable footing – if not a good one.
Well our question was answered on Friday evening as we finished up on 1.1705. That meant the Euro had done better this time around. It had added almost a whole cent onto its exchange rate, leaving the pound with a bit of work to do when it comes back for the next tussle next week.
Hong Kong is our next stop, as things got underway with the previous exchange rate of 12.745 to try and improve on. We’ve had two good weeks against the Hong Kong dollar though, so will it be three in a row or is that the limit of the pound’s power?
Well as it turned out Monday had very little to show us. The final rate for that day was 12.747, slightly in favour of the pound but not so as you would notice. Tuesday saw a bigger difference – but unfortunately that went in the direction of the Hong Kong dollar. The exchange rate at the end of the second day was 12.635. Could we stop the rot there and do something about it?
The answer came at the end of play on Wednesday. That brought an impressive exchange rate of 12.801, but although that gave us something to celebrate it didn’t last long. Thursday saw things dip down to 12.610.
That meant we had one more question to answer for the week – could we manage to improve things for the end of the week, or were we going to end up with a low figure to finish on?
As it turned out we did manage to pull ourselves back up again. As everyone headed home for the weekend, we finished up on 12.787. This was much better than Thursday’s figure, and a marginal increase against the week before of 0.042.
So we onto the fourth of our five currencies now, and it is over to New Zealand to see what happened there. We had a tiny loss altogether last time, leaving us on 2.5597 at the end of the week. Could we add to it this time?
Well Monday certainly kicked us off to a huge start, as we ended up on 2.5926 by the time the day was over. That equates to a huge 0.0329 increase on where we’d finished up the week before. But the question now was whether we could hang onto such a big initial increase or not. So let’s find out what happened next.
Tuesday didn’t look good if we wanted a positive answer to that question, as we’d slid back to 2.5714 by the close of the day. And the next day didn’t get any better. The rot slowed down for sure, but we still ended up on 2.5675 by the close of trading. So we had lost some two and a half cents in two days – could we hang onto any of the rest of the increase we had bagged so early on in the week?
Thursday didn’t make us any happier. We had finished up with an exchange rate of 2.5528 by the time the day was out, so although the pace of loss had indeed slowed down, we hadn’t got anything to celebrate yet.
And there was just one more day to go for the week. After such a successful beginning it didn’t look as though we would regain such heady heights to finish on. But with that said we were perhaps more focused on trying to limit the amount of damage we had seen over the course of the week.
The final exchange rate for the week turned out to be 2.5512. So after that initial jump up it was downhill all the way, but in actual fact we had lost less than a cent overall since the end of the week before. The big increase had been lost in total, but at least it had softened the blow overall.
Our final stop as always is Australia, where we’d finished up on 2.0401 the week before. Could we manage anything impressive here?
Monday got off to a great start, as we ended up on 2.0675 by the time the day was over. This didn’t make us feel particularly positive though, as we had seen a big increase in New Zealand too, and we lost that quite easily by the end of the week.
The pattern wasn’t proving to be the same in Australia though, as we were up again to 2.0696 on Tuesday. There was a marginal slip back to 2.0682 on Wednesday, but things were still looking more promising than they had elsewhere.
Two days to go though, and a lot of damage (or success) could still be seen in that time. As it turned out it was more like the former – we slipped back to 2.0413 on Thursday before recovering marginally to 2.0434 on Friday. So all in all we had added a tiny 0.0033 onto our exchange rate over the whole week.
So three good results and two not so good ones overall – can we do better next time?
After settling at 1.7890 at the close of Monday, the pound plummeted to 1.7531 just twenty four hours later.
It managed to pull itself back though and ended the week on 1.7880.
It really was an up and down week for these two – the Canadian dollar bagged 0.8731 at the close of Monday, and ended on 0.8718 for the week.
But that wasn’t before dipping to lows of 0.8604 and 0.8681, so thankfully things got better by the time the week was out.
The Euro did really well against the US dollar last time around. It closed on 1.3858 on Monday, but by the time the weekend rolled around it had increased things to 1.4096. Is there more to come next time perhaps?
The Financial Times website recently reported on the state of affairs regarding the British pound and how the UK is faring in general at the moment. You can read the article here.
So there we have it for another week. A mixed week really, but it is perhaps understandable given the good results we’ve had of late. But does this mean the tide is turning against the UK pound, or is there more good news to come next week?
We’ll be here to tell you, so we’ll see you then.