Posted by Allison on 24 March 2009, 09:53
We had just one thing to report last week as far as the British pound was concerned and that was ever worsening exchange rates, no matter which currency we held it up against.
A few weeks ago the pound was performing badly in certain countries but it still seemed as though you could use your currency calculator to help you unearth a good holiday or weekend break somewhere not too far away. But things are undoubtedly getting more difficult, and that is what we want to find out this week – did things still continue to get worse as August gave way to September, or could the pound finally start to find some enthusiasm from somewhere to push back and put some effort in at last?
Let's see what happened.
When it comes to comparing the British pound to the US dollar, there has been no contest lately as the dollar has exerted plenty of pressure to ensure the pound has been kept down.
To give you an idea of the direction things have been going in, two weeks ago we were looking at an exchange rate of 1.8589 US dollars to the pound, and the week after that had seen the rate drop to 1.8304. It's a very negative point of view to take, but how much further could it drop as August turned into September?
By the close of play on Monday we were looking at an exchange rate that had already sunk to 1.8013 – a drop of nearly three cents in a single day. Clearly there wasn't too much to look forward to for the rest of the week if this was how things were going to start.
And as if that wasn't bad enough, Tuesday presented us with even more evidence that we could have even more bad news to come. By the time the pound had limped its way through the day the exchange rate had dropped even further to 1.7855. It suddenly seemed as if those doom and gloom reports from those in the know weren't so hard to believe after all. The pound sank further to 1.7756 on Wednesday, and the only question that was really in everyone's minds now was how much lower it could go during the remainder of the week.
But Thursday brought slightly better news – and a slight increase to 1.7820 that came as quite a surprise. This just goes to show how much we have become used to seeing nothing but falling figures and a downward spiral as far as the pound against the US dollar is concerned.
And indeed by the time we got to the end of trading on Friday that piece of minor good news had been completely got rid of, as the pound sank lower than that and finished on a weak 1.7604 for the week. So all in all we saw the pound drop even lower over the course of the first week of September, dropping from 1.8304 the week before to 1.7604. That's a loss of an incredible seven cents over the whole week, and it makes the loss of just short of three cents from the week before seem tiny by comparison.
It makes us wonder what we will be reporting next week; we don't hold out much hope of being able to report a rise in the exchange rate, but it does make us question how much further it will fall.
So did the pound manage to hold its own against the Euro last week? We saw the previous week that there wasn't much between them, but the slight difference that we did see went in favour of the Euro – perhaps not surprising given the current weakness of the pound.
The final rate for the previous week was 1.2422, so when we had a closing exchange rate of 1.2320 on Monday 1st September, you would have been forgiven for thinking that the pound was already showing signs of another downward slide in Europe.
Tuesday seemed to confirm that as the pound ended the day by claiming an exchange rate of 1.2300 – not a large slide by any means, and certainly not on a par with the huge drops that were experienced when the pound went up against the US dollar, but it was still a drop in performance. Another small drop was recorded the following day, when the pound retreated to an exchange rate of 1.2295.
But that was when things started to change. Now it wasn't a huge change and we certainly weren't going to see a marked rise in exchange rates over the course of the rest of the week, but we did see an upward trend and it did last for more than a single day.
Thursday saw the pound push out of 1.22 territory and rise back up slightly to claim a closing exchange rate of 1.2300. That is a very small rise but any rise at this stage is a good one, because it means that any further rot has been prevented, at least temporarily.
And on Friday we closed the week out with another slight improvement, as the pound finished on 1.2356. That was still down on the previous week's closing exchange rate, but at least the pound showed some measure of strength in the second half of the week, and so that is what we should cling onto as hope for the future weeks to come.
So as always, let's leave Europe behind now, and see how the pound got along in Hong Kong last week. 14.289 was the closing exchange rate from the week before, and the first sign of how the week was going to pan out was seen on the first day of trading in September, as the first blood went in favour of Hong Kong, with the exchange rate pushing back to 14.062.
The very next day saw the exchange rate drop back further to 13.941, and we were left wondering whether we were going to see figures back over the 14.000 mark again for a while.
As it happened, if we do see figures like that again we will have to wait for another week, because the mid-week exchange rate dipped back a little more to 13.863. There was no doubt that the Hong Kong dollar was firmly in control here, and even though the pound showed some mettle on Thursday by raising the stakes to 13.911 it wasn't anywhere near enough to seal the week by claiming even the smallest victory.
The Hong Kong dollar regained its strength on Friday and ended the week on 13.743, which represents a drop of 0.546 over the course of the week. It remains to be seen whether the pound will continue on its slide here as much as it has in the US, but we will have to wait until next week to get the answer to that question.
Let's visit New Zealand now to see how the pound fared there last week; and here at least we are delighted to be able to report that we came out on top.
Our closing exchange rate with the New Zealand dollar last week was 2.5950, and when that slipped back to 2.5841 on Monday, you would have been forgiven for thinking that it was just the start of another bad week for the pound. But here at least we would not be seeing such a bad run of luck, because Tuesday brought better news.
By the end of that day we were claiming 2.6020 New Zealand dollars to the pound, and the following day we managed to improve on that a little by pushing the rate up to 2.6054. The only question now was whether or not we could hold on and claim a victory for the week?
Thursday's closing exchange rate looked to make that impossible, because suddenly we were down to 2.5961 and the old familiar feeling of gaining some ground only to lose it again and then some was beginning to nag at the back of our minds.
But for once there was going to be a fairytale ending to this story, and Friday brought a closing figure that was actually quite a surprise for all the right reasons. Unbelievably it had gone from 2.5961 the day before to 2.6500 – a nice increase of 0.0539 overnight and very welcome from the British point of view.
So how did we do in Australia? Did we manage to seal a similar victory, or would the figures reveal that downward slide that we had experienced in so many other places?
Happily for us the news was going to be good. The previous week saw a closing exchange rate of 2.1200 on the Friday, so we were hoping for any kind of improvement on that.
Monday brought a slight fall to 2.1112, so it didn't start off by going in the right direction, but from then onwards the only way the pound was determined to go was up. The following day we had gone past the closing rate from the previous week and finished the day at 2.1396, giving us something to celebrate and something to ponder over for the remaining days of the week, as we wondered whether there was more good news to come.
There was actually a slight drop over the next two days, but only very slight as Wednesday saw a finishing figure of 2.1324 and Thursday finished at 2.1313. But the biggest news – not to mention the biggest finish – was saved for the end of the week, and it had a similar effect to the result we saw in New Zealand.
The final exchange rate for the week soared to 2.1757, recording an increase of 0.0444 over the course of a day and a total of 0.0557 over the course of the whole week. And for once the figures were going in our favour.
So while we had bad news to come to terms with in certain areas last week, there was finally some good news worth celebrating in other countries as well. And in a time when we clearly need to make the most of any small gain that we can get with the pound, you can't blame us for having cause to celebrate.
Every time we see how the pound is doing against the US dollar, the dollar is consistently coming out on top. But this doesn't mean that the dollar is having problems of its own.
US export is expected to have a tough time of it, purely because the dollar is doing so well. It may seem ironic that there is a downside to having a strong currency, but this is exactly what the US is experiencing at the moment.
The interest rates in the UK are currently at 5%, and they remained at that rate last week.
It seems almost certain that the UK is going to have a recession, although no one seems quite sure exactly when it will happen. Although at the rate the pound is falling it could be a case of sooner rather than later.
If you hear about a currency falling by a whopping 19%, you know there could be trouble ahead.
And that is exactly what could happen with the South Korean won, which has hit a low not seen in four years. It will be interesting to see whether it can fight back or whether it has a real currency crisis on its hands.
If you want to find out historical exchange rates as well as current ones then it is handy to have access to a site that can give you both. One such site is http://www.discount-currency-exchange.com/ and it has all the tools you need to find the figures you want quickly.
That's just about it for this week – a mixed week for the pound but at least we had some good results for a change, thanks to its performance against the Australian and New Zealand dollars. We'll be back next week to see if it has reached its lowest point against the US dollar – or whether there is worse yet to come.
See you then.