Posted by Allison on 24 March 2009, 10:25
Here we are again with another weekly report on how the British pound is doing in the currency markets all around the world. As you will remember if you read our report from last week, the pound didn't exactly have an excellent week against most of the five major currencies. The decreases we did see in the respective exchange rates may not have been really big, but they didn't do much to improve our confidence that the pound would do better soon either.
And this was the second week in a row where the pound did slip against many of these five currencies. So what could we expect next? Will last week prove to be the third week in a row that we saw this pattern? Or would we end up with a better result that we could actually be proud of for once?
Obviously it is clear that the current situation is driven by what is happening with the economy. As one country reports an increase in unemployment or some other problem, the currency associated with that country usually takes a hit.
And at the moment we have certainly seen a lot of bad news coming out of the UK, which is why the pound has been struggling so much. But did this pattern continue last week in the currency markets? If you have had your currency converter at the ready to see whether the figures improve enough to make it worth taking a foreign holiday, you might want to wait. It could still be some time before we see big improvements to the exchange rates. But will we see small ones?
Our usual place to start is with the American dollar. Last time we saw that the closing exchange rate for the week left us well below $1.50, at 1.4222. The real question for this time around was whether we could pull away from the 1.40 mark, which was looking ever closer when compared to the 1.50 mark we wanted to be at.
So how did things start? Well in actual fact they didn't go the way we wanted them to. Monday started the week off in poor fashion, as the pound all but collapsed against the dollar. That might sound like an extreme statement, but when you see that the pound actually ended up on just 1.3786 at the end of the day, you will see how worrying the situation actually was. That represents a loss of well over four cents in just a day. And it took us well underneath the 1.40 mark that we desperately wanted to avoid getting below.
So what happened for the rest of the week? Things improved marginally on Tuesday, but not by as much as we were hoping they would. By the end of the day the exchange rate was on 1.3850. Could we start to pull back some of those losses from the beginning of the week and try and make the damage as limited as possible?
Wednesday didn't do anything to bolster our confidence, as we finished up on an exchange rate that was slightly lower. The closing figure was recorded as 1.3815, giving us more to be concerned about for the remaining two days of the week.
And indeed if we wanted to snag a better result on Thursday we didn't do anything to get it. The final figure on that day was 1.3732, taking us further away from the 1.40 mark that we wanted to avoid at the beginning of the week. Now it was all we could do to make sure we could get as close to it as possible, to limit the damage we had already inflicted.
So what did happen on the last trading day of the week? Did we manage to pull back some of our losses?
In actual fact we did – and we managed to get tantalisingly close to the 1.40 mark again. Of course we wanted to be much further over it if we could, but that was not to be. And at the end of that trading day we managed to claim just 1.3996 US dollars to the pound. In total that meant we had lost 0.0226 over the course of the week – leaving the $1.50 mark we wanted to be close to looking like nothing more than a distant memory.
So with such a bad performance against the US dollar, could we hope for any better against the Euro? With this European single currency, the ever present threat of parity is the one we want to be fearful of. Did we manage to steer clear of it last week?
The starting point we were on was 1.1235, so we were looking to improve on that as much as we could. But did we do it?
Well once again Monday turned out to be nothing short of disastrous. By the end of the day we were looking at an exchange rate that had slipped down to 1.0972. That was over two and a half Eurocents lower than the figure we ended up with on the previous day of trading. Was this going to be a repeat of the performance we had put in over in America?
Tuesday certainly didn't help to renew any confidence, since the exchange rate went down to 1.0835 by the end of the day. And the weakness of the pound was really showing by the time the following day rolled around too. The midweek figure was recorded at 1.0804, and there was worse to come as well, as we found out on Thursday.
This wasn't turning into a good week for the pound, as we saw by the fact that the closing figure on Thursday was 1.0743. Was there any hope of gaining back a little of what we had lost on the final day of the week?
Well we did at least manage to do that, although it wouldn't come close to giving us back the losses that had disappeared since the previous week. The final figure for the week was 1.0845, gaining back a little since Thursday, but still losing just shy of four Eurocents over the week as a whole. That was an amount we couldn't afford to lose, and yet it was lost. Could we hope to do any better next week, and pull ourselves back from the brink of being at parity with the Euro?
As we ponder on that question, let's move on to see how the pound did against the Hong Kong dollar. Last time we finished up on 11.030 Hong Kong dollars to the pound, so what would we get this week?
Well it would have been nice to stay above the 11.0 level for the whole week, but it wasn't to be. Monday saw a similar disastrous result as we'd seen in both America and Europe. By the end of the day the exchange rate had gone down to 10.692. That equates to a loss of 0.338 over the course of twenty four hours.
Could we do any better as the week wore on? Tuesday did actually see an improvement, as the exchange rate perked up to 10.742. But unfortunately that didn't last, as it slid back slightly to land on 10.714 the following day.
Thursday saw another decrease as the pound could only bag 10.648 Hong Kong dollars on that day. What did the final day of the week have in store for us? Could we recoup some more of the losses, or would we slide back even further?
Luckily the answer was a good one, as we managed to pull back to 10.851. But overall we had still lost out on a total of 0.179 since the same point on the previous week. Let's just hope that we are about to pull out of the doldrums and get some better results soon.
So let's move on to our next stop now, which is New Zealand. And we have a starting point this time of 2.8240, after the rollercoaster journey which we went on the previous week.
After the results we'd seen in other countries, we were almost expecting to see a poor showing on Monday. And that is exactly what we got in the end. By the close of play on that day the exchange rate stood at 2.7868. And unfortunately it didn't get any better as time went on.
There was another big drop the following day, as the exchange rate dropped again, this time ending up on 2.7599. And if we were hoping for better figures the next day, we were going to be disappointed then too. We lost another three cents off the exchange rate then as it dropped back to 2.7299.
So what did the final two days of the week have in store? Had we seen the worst already, or was there more to come?
Unfortunately the answer was the latter. Thursday saw an even more pronounced drop to 2.6841, while the final nail in the coffin was reserved for Friday. That was when the rot stopped at 2.6688. And that meant that the total loss was well over fifteen cents for the week as a whole. Not good news, and let's hope we can replace some of that loss next week.
Our final stop as always is Australia, where we finished up on 2.2228 last week. Could we hope for a better result here, or was this going to be just another bad result over the course of a troubling week?
The news didn't look that good as Monday got underway, and by the time it finished we were standing at 2.1815 Australian dollars to the pound. That meant we'd already lost over four cents for the week – and we still had four days to go.
But the drop got more pronounced the following day, as we lost more ground and finished up on 2.1499. Were we in for more losses before the week was out?
As it happened we were. On Wednesday the exchange rate had dropped still further to 2.1239, and while it went up marginally on Thursday to 2.1255 it wasn't enough to regain any of our significant losses. When Friday arrived it didn't bring any better news with it, and we ended up losing a bit more ground and finishing on 2.1244.
That meant we had racked up total losses of nearly ten cents over the week as a whole. And clearly this was a week that we would rather forget, hoping that things will get better soon.
If we thought the pound was having a bad week, at least we weren't alone in our woes.
The Euro was claiming 1.4669 Swiss francs on Monday of last week, and by Friday that had climbed to 1.5360. This was all in response to the fact that the Swiss bank had got involved with the currency exchange rate, as a response to these unprecedented times.
The US dollar kicked off the week by claiming 0.7958 Euros to the dollar, but it wasn't destined to stay that way.
By the time Friday 13th rolled around, the exchange rate had slipped back to 0.7748 – leaving the dollar hoping it could rectify things in the week ahead.
It was a bit of an up and down week when you look closely at the details, but on the whole the Canadian dollar held steady from start to finish against the Euro.
On Monday it was claiming 0.6095 Euros to the Canadian dollar, while by Friday that had changed very little to 0.6092.
One of the main websites for currency converters, Xe.com, has a news section that you may be interested in regarding all kinds of currency events. This can be viewed at http://www.xe.com/news/home.htm, and it stays up to date with the latest happenings around the globe.
So there we have it – another bad week for the British pound, and another week in which we hope that things will get better. Where is the rock bottom point, we wonder? As you may guess, only time will tell us if we are at that point already, or if it is still to come.
But regardless of what the answer might be, we shall be here to report on it for you. See you next time.