Posted by Allison on 24 March 2009, 09:55
Welcome to this week's round up of how the currency markets performed between the 15th and the 21st. If you remember, the last time we took a look at what was going on we actually had some good news to report. The British pound seemed to be starting to fight back and actually achieved some good results that week.
The real question on everyone's lips now is whether that upward trend is the start of something big, or whether it was merely the eye of the storm – a brief upward movement in a sea of bad results. As we look at what happened between the 15th and the 21st, we shall hopefully begin to see which of these events proves to be the case.
Our journey starts as usual with the head to head between the US dollar and the British pound. We have seen in recent weeks that the exchange rate has mostly been a long way away from where it was when we had two dollars to the pound and everyone was happy with the figures their currency calculator was giving them when it came to thinking about a holiday in that country.
But the last time we looked at the figures we had a slight increase, which meant there was a lot to celebrate – so where do we stand now?
1.7666 was the figure we ended up with the previous week, and we actually started off with a big improvement on the very first day of the week on the 15th, as the closing exchange rate went up to an impressive 1.7823 US dollars to the British pound. For a single day increase that was certainly enough to raise eyebrows and make us wonder whether it was the start of a very good week.
Tuesday saw more upward movement, but this time it was only by a very small amount, as the exchange rate crept up to 1.7889. Was this the first sign of a slow down that would end up signalling a fall for the rest of the week?
Well, Wednesday saw just about the smallest amount of movement possible, as we ended the day with an exchange rate of 1.7888 – a fall (if you could call it that) of just 0.0001 on the previous day, and nothing worth worrying about.
The question now was whether we could inch forwards and exert some more pressure on the dollar in the remaining part of the week, or whether we would lose the ground we had already gained.
As it was, we got to witness a very nice surprise on Thursday, because the closing exchange rate was pegged at an incredible 1.8255 – an increase of 0.0367 in just twenty four hours and a very welcome improvement on the kind of results we have been seeing before now.
Friday closed the week with a slight drop back to 1.8082, but that was perhaps to be expected given the huge jump of the day before. But even with that drop overnight, we still ended up 0.0416 up on where we stood at the same time the week before. That's an amazing four cents better off, and quite an upward movement to be celebrating.
So as the pound's strength against the dollar continued for a second week in a row – and indeed grew stronger – is it too much to hope for to be thinking about a two dollar pound once again? It is fair to say that it's a long way off yet, but it could still happen once again, and we will be looking very closely to see how things develop in the coming weeks.
Let's leave the dollar behind now and move across to Europe, where the pound has had quite a battle with the Euro in recent weeks. The previous week saw a win for the pound against a weakened Euro, but what would happen next?
1.2559 was the closing figure for the previous week and by the end of the Monday that figure had changed to 1.2595. This was only a small increase but very worthwhile and definitely a step in the right direction. We slipped back slightly on Tuesday though, as the exchange rate changed to 1.2539 – leaving us wondering whether it would be downhill from here on in, or whether there would be more improvements to come.
By the end of the following day we had our answer, as we were left with a figure of 1.2576. This was a small increase but it was still something to celebrate, and given the good week we'd had against the dollar there was every reason to suppose that result might just be repeated elsewhere.
Thursday saw another slight improvement to 1.2588, but the biggest improvement was left until the very end of the week in order to give us something to think about over the weekend. By the time Friday's trading was over, the pound was claiming 1.2701 Euros – a full 0.0142 up on the previous week, and definitely something else to celebrate.
With these two great results under our belt, the usual trip to Hong Kong that we take at this point was even more exciting. What would we achieve here?
13.776 was the finishing figure from the previous week, and anything more than that would be something else to celebrate so we were looking for a good start. And as it happened that is exactly what we got, with a closing rate on the Monday of 13.891 Hong Kong dollars to the pound.
But there was more to come on Tuesday. By the close of play the exchange rate had improved still further and was sitting at 13.917. It moved up by a microscopic amount on the following day, but by the end of trading on Thursday we had managed to break through the 14.0 barrier and we claimed 14.203 Hong Kong dollars to the pound.
Could we finish the week with a flourish though? After that huge leap of the previous day it wasn't much of a surprise to see that the exchange rate dropped back down to a more acceptable 14.075 – although that was still an increase of 0.299 on the previous week and more than enough of an improvement to give us something else to celebrate.
It was clear by this point that this was going to be another good week, making two in a row so far and giving us hope that this wasn't going to be just a brief improvement that would soon be lost in the midst of time.
From here it's on to New Zealand, to see whether we could claim another victory over there. We did extremely well against the New Zealand dollar the week before, so we were perhaps feeling confident that we could source another victory this week.
We started off with the 2.6942 New Zealand dollars to the pound exchange rate we ended with the previous week, and by the close of play on Monday that figure had risen to 2.7110. A great start to what would prove to be a great week perhaps, or was it too early to tell?
Well Tuesday was certainly another step in the right direction, because we managed to exert a bit more pressure to have an exchange rate of 2.7246 by the end of the day.
But that was where things started to change. What looked as though it would be a good week in New Zealand for the pound started to turn into something very different, as Wednesday's closing figure was down on the previous day, coming in at 2.7150. Was this the start of a downward trend?
Unfortunately the answer was yes. Thursday saw another drop which ended at 2.7000 by the close of trading, and the following day saw the final figure for the week dipping even further to 2.6677. This represented a huge drop over those last two days, and over the course of the week our exchange rate with the New Zealand dollar was 0.0265 lower than it was at the end of the previous week.
So it was clearly not a week to be celebrating in New Zealand as far as the British pound was concerned, which started to make us wonder whether Australia would present a similar picture. Let's see what happened.
The previous week's closing exchange rate in Australia was 2.1906 Australian dollars to the pound, and it was a pretty good week too. But would the following week get a good result, or would it be another downward trend as we had seen in New Zealand?
Well it was actually a very interesting week, and the daily picture provided some meat to get our teeth into. Monday saw a closing rate of 2.2097 – a slight improvement which saw the pound doing well for starters. But the following day saw a result which would have made you double check the figures to make sure you weren't just seeing things – because the closing exchange rate for Tuesday was an incredible 2.2517. Now that was certainly a great one day improvement. We have seen so many times before however that a big one day surge is often corrected the very next day. Would this occasion prove to be the same?
As it happened the answer would be no. Wednesday saw an almost imperceptible drop in the figure, although it was still 2.2517 because the drop was so slight. Thursday saw another improvement to 2.2609, which meant this was shaping up to be an excellent week, and certainly not a repeat of New Zealand's performance.
Friday saw a drop however which did manage to wipe out much of the good work that had been done previously. By the end of trading for that week we had an exchange rate of 2.2234 Australian dollars to the British pound – still an improvement of 0.0328 over the week before, but it could have been so much more.
We should still be celebrating overall however, because this was an excellent week for the pound which certainly managed to build on the improvements that were made the previous week. It remains to be seen how long this will go on for, but it is certain that at the moment things are looking pretty good.
It seems that the US dollar isn't quite the mighty currency it wants to be when it comes to the Japanese yen.
Market conditions have meant that the yen is by far the strongest of the two currencies at the moment, and it remains to be seen whether the dollar will be able to pull back any ground.
Most people have noticed that the US dollar has been performing rather better when it comes to the British pound than it has done in previous weeks.
While the two dollar pound is still a way off, it may be that the exchange rate in the $1.50 region that some people were suggesting may not actually happen after all.
The Euro is another currency that has been struggling of late, and it certainly hasn't done very well against the US dollar.
What's more, it seems as though any momentary peak is soon wiped out, so it has a hard road to negotiate before it can hope to hold its own.
Anyone heading off on holiday will want to know that they can get the best exchange rate possible. Using a currency converter online helps you to understand what the latest rates are, but you can order your foreign currency online as well.
One website that allows you to do just that is http://www.tescofinance.com/personal/finance/finance/travelmoney/index.jsp. It gives you 0% commission which means you can get a great start to any holiday you book.
So there were are – another week of drama for the British pound that has seen some good results to finish with. The only question now is whether we will see more improvements next week, and we will be back here as usual to find out.