Posted by Allison on 19 May 2009, 10:39
Welcome back to our regular weekly look at how the pound is doing in the world currency markets.
And it has been a very interesting journey of late, hasn’t it? After weeks of trying to get above the $1.50 mark against the US dollar again, we finally managed to do it in style last time around. The question now has gone from whether we could do it or not, to how long we can keep it up for. So this at least will be a key point we will be looking at during our report this week.
In addition to that we had a good time against the Euro last week. The Brits are still eager not to join the single currency by and large, so news that the pound was standing up against the Euro would have been well received. Hopefully we will have more of the same kind of news to report this week as well.
The more interesting picture last time around was the state of the currency when held up against the Aussie dollar and the Kiwi dollar. Both of these traditionally give us some real ups and downs to look at, and last week was no different. You can literally look at the currency converter from one week to the next and see that the pound is worth ten cents or more less than it was the week before – or vice versa.
So with expectations high and the desire to get some more good results for the British pound, let’s dive right into the markets once again to see who came out on top.
Are we ready?
As we mentioned before, the pound finally clawed its way back up last week to finish on 1.5072 against the US dollar. This was slightly less than the high point of 1.5129 reached previously, but it was good enough. But could we stay above the $1.50 mark for the whole of this week?
Let’s see what happened.
Monday certainly got the week off to the desired start. By the time the markets closed on that first all important day the pound was settled on 1.5105. So we got the start we wanted – the question now was whether we could do even better.
Tuesday dawned bright and early and the markets were soon in full flow. After a while it was clear that the pound still had plenty of fight left in it, and the US dollar had a challenge on its hands. By the time the markets closed the pound had achieved still more and was sitting at 1.5315 – more than two cents up on the previous day.
Call us pessimistic, but surely we had to slip soon. This all seemed rather too good to be true in a sense, and unfortunately that did turn out to be the case. By the time everyone went home on Wednesday the exchange rate had dipped back down to 1.5140. That meant the British pound had lost almost two cents in a day, wiping out nearly all of the previous day’s gains in one fell swoop.
But let’s not forget that the pound was still well over the $1.50 threshold. Could it hang onto it for the remainder of the week?
It dropped back a little more on Thursday, finishing on 1.5101 by the end of the day. But that wasn’t too much of a loss, and unless we did really badly on the last day of the week we would hope that the $1.50 territory was still safe.
And indeed it was. As things turned out, Friday saw the pound finishing up slightly on 1.5180 to close out the week. That meant the pound had added just over a cent to the exchange rate across the week as a whole. That was great news and it meant we were still going in the right direction.
So let’s see whether it could repeat that successful event in much the same way with the Euro. Last time we finished on 1.1227 after bagging a marginal increase across the week. What would we manage to achieve this time round? Could we gain a more convincing foothold against the single currency, or would it get the better of us instead?
As it happened, Monday saw the first step go in favour of the single currency, as the exchange rate dipped down to 1.1128. Was this the start of a downhill slide, or was the British pound simply taking a little longer to get going in this fresh new week?
Whatever the answer might be, the figures were somewhat better the following day. That was when the pound fought back and the exchange rate was boosted to 1.1193. That was still lower than we saw the previous week, but at least we were headed back in the right direction.
The midweek point clearly marked out the centre of a week that was inevitably going to be an up and down affair however. The pound sank back to 1.1113, the Euro counted its blessings and we were wondering where the final two days of the week would lead us to. Would the pound be able to get back in the driving seat and claim a small victory over the week as a whole?
Thursday gave us some small hope to cling onto, as the pound found a little energy to fight back with. By the close of play on that day, the pound had crawled back up to 1.1134. It wasn’t much to celebrate, but perhaps it was getting ready for the big finish on Friday?
That might sound like a joke but it actually turned out to be true. The British pound fought back and showed some fortitude by finishing on an impressive 1.1229 for the week. That meant we had gained a miniscule amount of just 0.0002 over the week as a whole. Another small gain much like the week before, but at least it was a gain and not a loss.
So we move from Europe over to Hong Kong now, where we had bagged another good result the previous week and finished on 11.681. The question now was whether we could repeat that 0.165 increase from last time and add on still more this time around.
Let’s find out. Monday got us off to a great start with the closing exchange rate recorded as 11.706. Not a huge increase but enough to get us started for the week on a strong footing. What would happen next?
Well, Tuesday stayed on the same footing with another increase in the bag for that day. By the close of play we had managed to win against the Hong Kong dollar once again, and the pound claimed 11.869 Hong Kong dollars in total.
As it turned out that would be the high point of the whole week though. Wednesday drew to a close with the exchange rate held back to 11.734, and there was more to come. It almost seemed as if the Hong Kong dollar had got off to a slow start and was eager to make the most of its fight back.
This was borne out by Thursday’s closing rate of 11.704. The question now was whether we could pull things back and improve on the final day of the week. And as it happened we managed to do just that, although not by an awful lot. The final exchange rate of the week was pegged at 11.766, so we did manage to improve by enough to give us an increase against the previous week. The total increase was 0.085, so while we didn’t gain as much as last time we did still manage to improve our standing which was encouraging.
Let’s move onto New Zealand now, where we lost nearly nine cents the previous week. We needed a good result now, and we were starting from 2.5295 this week. What could we achieve?
Well Monday didn’t bode well as the drop continued. As the markets closed for the day we were down to 2.5080. With this start to the week, what would the other four days have in store?
Things got better the next day though, as we soared back up to 2.5246. That is a gain of over a cent and a half in a day, so perhaps we had finally stopped the rot. And we had another small increase the next day which left us on 2.5282 at the day’s end, so that looked promising as well.
But the big jump was saved for Thursday, when the final exchange rate was an incredible 2.5683. And there was more to come when the closing rate for the week was 2.5828. That means we had managed to succeed by a great extent over the whole week, adding an impressive five cents and more to the exchange rate. That was worth celebrating!
But could we repeat that achievement over in Australia? We’d lost over four cents there the previous week, so we would be grateful for a good result here too this time around. The starting point was 1.9874, but we didn’t exactly get off to the best start as we finished the Monday on 1.9847. It was only a small loss though, so fingers were crossed that things would get better.
And they did – and we didn’t have long to wait either.
Tuesday finished up on 1.9988, taking us very close to the two dollar rate, before dipping back down to 1.9874 on Wednesday. But things got better still the following day, as we finally got past that two dollar barrier and landed on 2.0170 on Thursday evening.
We dropped back a little by the end of the week, but it wasn’t enough to cancel out most of the gains we had made. The final exchange rate for the week was 2.0128, so we were definitely successful in making this a good week for ourselves. The total increase we had managed to bag was over two and a half cents, so that was worth celebrating.
And it was a good week on the whole too. We had increased our standing against every one of the major five currencies we look at each week. So it was definitely a time to celebrate.
The governor of the Bank of England foretold that the UK would be slow to recover from the recession. But as we can see from the results above, it didn’t have much of a negative effect on the pound last week.
After an early dip the US dollar had a good week against the Euro, which seems to be struggling in the current times. Monday finished with the dollar bagging 0.7367 Euros, while four days later that was up to 0.7397 Euros.
A disappointing week for the Euro was borne out by a bad result against the Hong Kong dollar too. A rate of 0.0950 on Monday went up to 0.0954 on Friday as the dollar sought to gain against the beleaguered Euro.
So there we have it for another week. Things have gone well for the British pound this time around, and let’s hope that this isn’t just a pleasant blip on the radar. We need to see good results for a few weeks straight to be reassured that the pound is doing well overall.
To that end, we’ll be back next week to see if we can achieve another round of good results. We’ll see you then.