Posted by Allison on 24 March 2009, 10:08
Welcome back to yet another of our weekly looks at how the British pound is doing worldwide. If you are a regular reader of these reports then you will know that the pound hasn't been doing too well of late. And you will also know that the last time we looked at the battle between the British pound and the US dollar, the pound finally fell below the $1.50 mark. It also did badly elsewhere.
This puts us in a rather interesting position this week too. Will things continue to get worse? Or will this prove to be the bottom of the dip?
The world as a whole is still struggling with the same conditions as we are in the UK though, so that in effect is our only hope – that other countries currencies will also find it hard going. Many people will hold off on going away for more than one reason now. Their currency converter will tell them their money isn't going as far as it used to, and the cost of living here is such that staying at home isn't giving them as much cash as they would like either.
So without any more speculation, let's see what actually did happen last week, now that we know the pound has broken that $1.50 barrier in the US. And from there, we will see how it performed elsewhere as well.
So by the end of the previous week the pound had managed to stop the exchange rate plummet against the dollar at 1.4741. The real question now is whether it was going to drop any further, or whether that would prove to be the bottom – at least for now.
Well if we were expecting an immediate plummet to new and even lower depths, that wasn't what we got. In fact we managed to regain some ground on the first day of the week, as the exchange rate went up slightly in our favour. By the close of play on Monday we were standing at 1.4924. Would we end up going above the $1.50 mark and starting to climb back up again?
On Tuesday that possibility actually did come true, and the exchange rate pushed up to 1.5025 by the end of the day. But we have seen increases like this in the past that almost lull you into a false sense of security before things go against you once more. Would this be another one of those occasions?
Wednesday did actually bring another increase, but it was not as big this time. It seemed to signal something of a slowdown, and by the close of play the exchange rate between the US dollar and the British pound stood at 1.5044 – just 0.0019 up on the previous day.
Unfortunately that would turn out to be as good as it got for this week. By the time the next day had ended, we were looking at an exchange rate of 1.4893. It seemed as if we had seen the best result of the week before the week was even half over.
By the end of Friday when everyone went home for the weekend, the pound had recovered ever so slightly to finish on 1.4984. So for the week that meant we had actually gained some ground over where we were at the same time last week. Despite the rise and fall which occurred in the middle of the week, we were left with a rise over the previous week which added up to 0.0243 cents all in all.
So what seemed like a bad week was actually a lot better than it could have been, although we don't doubt that we will be challenged again in the near future. We are in a time when we will be seeing a lot of rises and falls when we go head to head against the dollar - and that isn't likely to end anytime soon.
So let's move across to Europe now and see how the Euro made us work last week. Previously we had dipped down by over seven cents to 1.1630, so anything better than that last week would have been a blessing.
Well we did get a good start as we finished on Monday with an exchange rate of 1.1788. That was a nice start and as it turned out it wasn't just a single event. The next day produced another good result, with a closing rate of 1.1875. Could we keep this up and keep on going up for the rest of the week? If the Euro zone was experiencing many of the same problems as we are with the economy at present, it seemed as if we were managing slightly better. Some countries in the Euro zone have already officially gone into recession, and the UK hasn't quite caught them up yet – even if it is going to be something of an obvious outcome when it happens.
Wednesday kept things going in our direction, as the day's events ended with the pound looking up once more as we recorded another increase to 1.1907. But we have seen midweek peaks before, and this was going to be another one of those.
By the time trading had finished on Thursday the rate had slipped to 1.1875. That was only a slight slip though, and given that we actually recorded another increase to end the week on – at 1.1890 – it was something we could live with.
So that means we actually increased our standing over the Euro for last week, with an increase of 0.026 overall. Considering the fact that we have seen some bad weeks recently against many of the major currencies, this wasn't shaping up to be one of the worst ones.
Up next is our regular weekly trip over to Hong Kong, where the pound lost 0.803 last week. That is a lot of ground to try and make up, so did it manage to succeed in any way?
We were starting from 11.425 last week, and by the end of Monday that had increased to 11.566. Once again, a good start and one that we needed to capitalise on if we could.
And Tuesday brought even better news as well. By the end of a vigorous day's trading we had managed to exert some more pressure and recover some more lost ground. The exchange rate stood at a healthier 11.644 by the close of play. The question was whether or not we could keep it up.
Well we did indeed manage to, although the rate of growth slowed somewhat on the following day – that midweek peak again, possibly – as we finished on 11.659. Would we now see a dip to follow this possible peak?
Unfortunately the answer was yes as we finished on 11.542 the next day, erasing the good work we had achieved against the Hong Kong dollar during the week up until that point. But there was a little more good news to come, as it seemed the pound hadn't yet finished the week.
As Friday's trading ended the pound managed to push back against the Hong Kong dollar and finished with something of a flourish on 11.614. That means we had increased our value during the week, gaining a total of 0.189 against the dollar. We would have hoped for better, but it was an increase – and another good result to further bolster our performance for the week.
So on to New Zealand next, where we lost 0.0406 the previous week. But given the rather better performance put in by the pound so far, could we reasonably expect to see better results here too?
Let's find out. We were starting from 2.6450 on the Monday morning, and by the end of the day we had our first increase of the week, rising to 2.6790 against the New Zealand dollar.
Did I say first increase? I certainly did, because there was more to come. Tuesday brought an even better result, with the closing exchange rate standing at 2.7292 – an increase of just over five cents in a single day. Could we do even better? We have certainly seen some huge increases against the New Zealand dollar recently, although they have been tempered with huge falls on occasion as well.
But this time the news was good, as we finished up on Wednesday with a figure of 2.7424. A smaller increase for sure, but it was still going in the right direction.
And as it turned out we wouldn't see a fall all week. Thursday crept up once again to register an exchange rate of 2.7560 against the New Zealand dollar, but the best result of all was saved for last.
When the markets closed on Friday and everyone went home for the weekend, the pound had pushed back to get an even better result and finished on 2.8363. That means we managed to gain an impressive 0.1913 over the course of the week – another brilliant result and more to celebrate. And given the pound's performance in previous weeks it is good to be able to say that.
So finally we go to Australia, to take a look at the last currency for the week. Last time we lost nearly twelve cents in a single week, so here we would have appreciated a much better result – especially given the results we have gained so far this week.
We were starting from 2.2448, and by the end of Monday we had something to celebrate already. The exchange rate between the British pound and the Australian dollar had improved to 2.2905. Tuesday brought another welcome increase as we sought to reclaim the ground we had lost the previous week. We finished up that day on 2.3169.
Was there more to come? As it happened, there was. The midweek increase to 2.3275 was not as pronounced as the ones that had come before it, but that didn't mean that the increases had slowed down irretrievably.
In fact, by the end of trading on Thursday we had jumped up again to 2.3663 – an increase of 0.0388 overnight. And we obviously weren't going to settle for any lower figures this week, because by the end of the week when everyone went home, we were looking at an exchange rate of 2.4111. That is equal to an increase overall of 0.1663 – nearly seventeen cents up on the previous week. So we certainly made up for the twelve cents we lost before, and gained some extra ground as well.
So all in all this was actually a good week for the pound, and we'd like to see some more movement in the same direction in the weeks to come. But will we actually get it?
Some currencies might be struggling in the current climate, but that isn't the case for the Japanese yen.
Not many currencies can say they are performing at their best against the US dollar, but that is certainly the case here. It saw a huge climb on Thursday in particular, but there is no doubt it is the stronger of the two at the moment.
The Indian rupee was just one more currency that went up against the Japanese yen and lost last week. From a closing figure of 1.9584 on Monday, it fell to 1.9014 by the end of the week.
The US dollar carried on rising against the Euro for much of the week, until it dipped down to finish up on 0.7935 by the end of Friday.
The dollar is generally regarded as being stronger than the Euro, given the fact that some countries in the Euro zone are now in recession. But will it stay that way?
So here we are at the end of another week. Will we be celebrating more increases next week, or will we be commiserating another bad performance? Come back and join us to find out.