Posted by Allison on 24 March 2009, 10:10
After a week in which the pound finally dropped below the $1.50 mark against the US dollar, last week followed on by actually giving us a better performance with the pound.
So what happened between the dates above, as November finally rolled to a somewhat memorable close? Did the pound manage to hold its head up and keep hanging on for at least a reasonable exchange rate? Or did it dip below $1.50 against the dollar again?
We will soon find out, as we are about to go through our weekly round up of currency news. But no matter how well the pound may have done last week, you will probably still want to stay away from the currency converter, as the exchange rate won't have improved enough to make you want to head off on holiday anywhere!
So let's see what was happening last week, and whether or not the pound can hold its head up high at the moment.
The previous week saw the pound perform rather well, especially given the bad results it had delivered before. But even though it did gain some much needed ground against the US dollar, you had a feeling that it may not last long.
So how did it do during the last week of November?
Well we had finished on a low point of 1.4984 the previous Friday, so anything above $1.50 would have been something to have a mild celebration about last week. Monday started off with such a small change that you would have blinked and missed it – but it did at least go in the right direction, registering a small increase of 0.0013 to push the exchange rate up to 1.4997 – perilously and tantalisingly close to the $1.50 mark again.
But that slight upward movement was mirrored the following day as the British pound pushed things over the mark and ended up on 1.5005 for the day. It was more of a symbolic moment than anything else, but it was still nice to know that we were back over that barrier again.
So would things continue to run in our favour throughout the rest of the week, or was this simply lulling us into a false sense of security?
Well it was certainly worth coming back on Wednesday, because the pound seemed to have regained something of its perkiness. The US dollar relented slightly and let the pound win the day, registering an exchange rate of 1.5296 by the close of play. This was certainly something to think about – and it was going to continue going in our direction too.
By the time Thursday ended and everyone headed home, we were left wondering if this was going to be the point where we started heading back up again after hitting rock bottom. This was because we had finished with a rate of 1.5434. That was almost unthinkable just a couple of days before, so what could we do now with just one day left to go?
Unfortunately we slipped and lost some pace, and the US dollar came back to level things out slightly with a final exchange rate for the week – and indeed the month – of 1.5335. But that still represents a gain overall of 0.0351over the whole week, which given the fact that we have had some bad results against the US dollar lately is more than good enough for us to celebrate over this time around.
So the next stop after America is traditionally Europe, as we see how the pound performed last week. Last time we saw an increase of 0.026 over the Euro – another good result in what was actually a pretty good week. But what happened last week?
We were starting from 1.1890 as the currency markets opened on Monday morning, and by the time the day was over our position had weakened considerably. We finished up looking at an exchange rate of 1.1741 by the end of the day.
Could we improve and start gaining some ground during the rest of the week? Well Tuesday actually brought another slip, but this time it wasn't quite so severe. The close of play on that day brought the news that the pound was now standing at 1.1713.
Wednesday would prove to be the point where things would change though. That was definitely good news because we couldn't really afford to carry on losing ground throughout the rest of the week. As it was, we finished up on 1.1825. Not quite back to where we had started on Monday, but we were getting there.
And on Thursday we made it. After a vigorous day on the currency market the pound stood at 1.1964 against the Euro, and that was certainly something to be proud of. Even in these tough times the pound can often produce some grit from somewhere to pull out a much needed result here and there.
And if we wanted a better result still on Friday, we actually managed to get it. What's more, we tipped over the 1.20 barrier too. By the time everyone quit for the weekend we had secured an exchange rate of 1.2049. That meant the pound had improved to a degree of 0.0159 over the course of the week. Not as much as we would have liked, but still a good result.
The previous week in Hong Kong saw the pound gaining 0.189, so we were interested to see whether we could prolong that and grab an equally good result for a second week running.
We were starting with an exchange rate of 11.614 against the Hong Kong dollar, and by the end of Monday we had seen a small increase of 0.012, which pushed it up to 11.626. A tiny amount, but at least it was going in the right direction.
And we had a similar result on Tuesday, as the exchange rate went up by an equally small amount to reach the heady heights of 11.634.
But could we push it up any further?
Well as it happened we could. Wednesday saw a slightly more bold push upwards, as the pound exerted a little more pressure on the Hong Kong dollar. By the close of play on that day, the midweek point, we had secured an exchange rate of 11.864.
If we thought that was the peak moment we were wrong. Thursday turned out to take that accolade for the week, as the final figure after a day's trading stood at 11.965. We then lost a little ground as we closed for the weekend on 11.885, but that still meant we had gained 0.351 over the course of the week. And considering some of the results we have had in the past, it is something to celebrate for sure.
From Hong Kong we take our usual journey across to New Zealand, where the previous week had seen a huge increase of over nineteen cents against the New Zealand dollar. Now given the reasonably good performance by the pound elsewhere this week, could we expect to see a similar – and ideally big – leap up again here too?
The starting point this time around was 2.8363. But that was soon forgotten, unfortunately, as the characteristically big swings against the New Zealand dollar came into force at the very beginning of the week. By the end of Monday afternoon the pound stood at 2.7731.
We have seen such drops in the past be forgotten very quickly and regained in no time, but it wasn't going to happen this time. On Tuesday the pound managed to claw back some ground and finish on 2.7852 for the day.
And as it turned out, small increases were what we should have looked forward to for the whole week. The midweek point saw an increase of just 0.0031 for example, as we finished on 2.7883 for the day. Thursday brought us remarkably close to the 2.80 point but veered away, leaving us on 2.7995 at the close of play on that occasion.
And we couldn't even reach it on Friday - 2.7969 was the best we could hope for. That meant this was our first loss for the week. We finished up nearly four cents down on where we had stood the week before, so although it was a disappointment it wasn't as bad as it could have been.
So finally we go on to Australia, where we had a jump up of seventeen cents the previous week. Was it therefore too much to hope for that we might end up seeing another good result this week?
Well the starting point here was 2.4111 – and by the end of the first day of the week that had slid down to 2.3407. Was this going to be a similar pattern to the one we had already seen in New Zealand?
Tuesday certainly brought a marginal increase, as the exchange rate crept back up slightly to 2.3526. Wednesday crept up a little more and left us on 2.3642 for the day. What more could we achieve?
As it turned out, the answer was not much. Thursday saw us slide back again and the Australian dollar took control once more, giving us an exchange rate of 2.3557. And Friday closed in a similar position, with a final rate for the week of 2.3536.
That means we lost a total of 0.0575 – nearly six cents over the course of the week. Not perhaps as bad as it could have been, but bad enough.
So it was a mixed bag last week for the British pound. Good results in some countries and not so good in others. Perhaps next week we will see a little more strength once again?
There was plenty of speculation last week that the US dollar might not be as strong as it has been in recent weeks.
Debt is mounting in the country, and the state of the economy has dented confidence in the whole system. This could damage the strength of the dollar in the near future.
We always see how they do individually against the pound, but it's rare that we see how they perform against each other.
After a midweek dip, the Australian dollar fought back against the New Zealand dollar to end slightly up on its starting point.
With the UK on the very brink of recession (if it isn't there already), the pound is still struggling against many other currencies, and it may well continue to do so for a long time to come.
Watch out in particular for its performance against the similarly embattled Euro, the currency it does not want to get swallowed up by.
The effect that the different currency rates can have on businesses and property in different countries is seen no better than at the website called Property Wire. If you want to keep up with how currencies are affecting this particular sector, go to www.propertywire.com now.
So here we are at the end of another interesting week for the pound. Will it continue to struggle for the forthcoming weeks and months? It appears that it will.
It seems almost certain that this current situation will be in effect for a long way into 2009 at least, and it may take even longer for the confidence in the markets and banks to be reborn. It is still not 100% clear how bad this current situation could get, but with people battening down the hatches and trying to save as much money as they can, this is certainly a trying time of the year.
Next week we will see how the first week of trading in the currency markets in December went, so we will see you back here then to find out the answers everyone wants to know.