Posted by Allison on 10 May 2010, 15:21
Welcome back to the latest currency report for the British pound, which this time covers the period which saw the General Election take place. We now know that the election resulted in a hung parliament for the UK, and at the time of writing we still do not know who the new Prime Minister will be.
But has this uncertainly subjected the pound to a battering as far as the figures on our currency converter are concerned? Before we find out, perhaps we should remind ourselves of how things played out at the beginning of the week.
We had two good results last time around, one against the Euro and the other against the Australian dollar. In the former situation we were one Euro cent up by Tuesday evening, and in the latter situation we had achieved an increase of 0.0136 against the Aussie dollar.
Elsewhere the news was not so good though. Against the US dollar we had lost out on one and a half cents over just two days. We also lost 0.105 against the 71Hong Kong dollar and we dropped a further 0.0071 against the New Zealand dollar.
But with the election looming how would the pound cope with the first hung parliament in over thirty five years? Let’s find out now, and see if the pound was any more decisive than the results.
So first of all we start with the US dollar, where we last left things on 1.5162. On the eve of the election things fell a tiny amount to 1.5114, but this was not really of much concern.
However it would be from Thursday onwards that we would start to see some differences in the exchange rate between the British pound and the US dollar. By Thursday evening there was a marginal drop to 1.5098, but the week ended in disastrous fashion as the hung parliament put paid to any hopes of a better exchange rate.
Friday’s closing amount was 1.4683, which meant we had lost out on nearly five cents since Tuesday evening. More than this was the fact that over four cents of that had been lost overnight.
But what would happen to the pound battling against the Euro? Would we see a similar result here?
The starting line was at the rate of 1.1584, and we actually then had a couple of really good days as far as the strength of the pound was concerned. Wednesday saw a rate of 1.1694 coming into play, followed by 1.1863 on Thursday night. But then the effects of the election came into play again, and the pound finished the week on 1.1520. At least given the peaks on the previous two days it became evident that they stemmed the losses on the final day.
Next let’s move on to Hong Kong and their dollar, where we last left things on 11.772. We saw a slight drop the next day to 11.738, which was swiftly followed on Thursday by a drop to 11.733. But once again the worst was saved for Friday, when the pound dropped down further to 11.423. The ‘election effect’ had swung into action again, destroying any hope of finishing the week on a good note.
So where would the exchange rate of 2.0903 go with regard to the New Zealand dollar? Would we be even closer to the $2 rate by the end of the week, or could we stem any losses?
Wednesday saw a slight increase to 2.1066 for the pound, which at least gave us a bit more of a cushion for later in the week. But the first marked drop actually came the following day as we fell back to 2.0812. This was followed by a fall to 2.0582 on Friday – giving us another depressing loss of nearly five cents over those last few days of the week.
Finally it is on to the Aussie dollar, where we last left things on 1.6557. There was an increase of over a cent by the end of the next day, when we improved our position to 1.6664. We then managed to achieve a figure of 1.6697 on Thursday evening, but perhaps Friday was to provide the biggest surprise of all.
We once again suffered a loss, but it was nowhere near as heavy as we may have feared – not this time. Instead we settled onto 1.6525, meaning that we had lost out on just 0.0032 since Tuesday evening.
We must stick with the pound now and see what losses were incurred elsewhere. It dropped from 1.5440 to 1.5239 against the Canadian dollar, losing two cents in the process.
The starting rate of 1.6594 on Tuesday night fell to 1.6293 on Friday, as the pound tried and failed to go up against the Swiss currency.
The opening rate on Wednesday morning was 143.249 here, but by the time the markets closed at the end of the week that figure had dropped to 135.752.
As we can see, the big news last week was the effect the hung parliament result had on the British pound around the world. This report from the Reuters website - encapsulates the story we have already seen above. The British pound will not bounce back until we have a new government in place, and even then, given the nature of what has occurred it may be some time before positive results occur.
So we shall have to wait and see what news comes of the talks to form a coalition or minority government in the coming hours. Perhaps by the time we report back on the next few days as experienced by the pound, we will know who will be in charge. And maybe this will have an effect on how well or badly the pound does in the next few days.