Posted by Allison on 24 March 2009, 09:56
Welcome back to the latest round up of results from the currency markets. Last time we saw that the pound had a pretty good week all told, with good performances against several other currencies including the US dollar – something to celebrate especially considering the poor performances we have been used to over the past few weeks.
So what did we manage to achieve last week? Was it another notable week for the British pound? Or was it notable for all the wrong reasons? Let's take a look and see whether we have something to celebrate – or something to commiserate.
So our usual start is over in America, where there is continually a tussle between the US dollar and the British pound, even if that tussle is one that the US dollar has been winning more often than not of late. Last week's results were pretty good for the UK though, so what will we see now?
1.8082 was the reasonable rate we were left with at the close of play last week, and that meant we were looking to capitalise on the good fortunes of that very week. Monday started very well with a closing exchange rate of 1.8397 – an increase of 0.0315 in just one day's worth of trading. Was this going to be the forerunner to another great week for the British pound? Time would soon give us the answer.
Tuesday was an equally interesting day as the exchange rate crept up even more to 1.8528. Some people had questioned even just a couple of weeks ago that an exchange rate down in the 1.50's wasn't out of the question, but on this performance it would seem that this would now be a figment of the imagination more than it would be a possibility.
The following day we saw another improvement, albeit a minor one now at 1.8539, just 0.0011 up on Tuesday's closing effort. Thursday brought more mild good news though as the exchange rate pushed up further to 1.8560, as the pound found further strength from somewhere to make sure that it wouldn't end the week on a low note. Anyone thinking about visiting America would have had renewed interest in the currency calculator as far as working out how far their money would take them was concerned.
Friday actually brought us a slight dip to end the week with, but this wasn't a problem because we still finished on a high thanks to that sterling performance (if you will excuse the pun) on Monday. Friday closed on 1.8420 US dollars to the British pound, which was 0.0338 up on the same time the week before, so we could hardly complain.
That makes three weeks in a row now where we have had good performances from the pound versus the dollar, and while we are still a long way off from achieving that two dollar pound we saw a while back, the fact remains that we are still a lot closer to that than we are to the doom and gloom of the 1.50 exchange rate that some people were trying to scare us with. Who knows, they may still be proved to be right in the long run, but with so many events taking place that are tied to the credit crunch and the struggling economies in so many countries, we aren't likely to see anything remotely like a stable exchange rate for a while yet. We'll just have to see what happens next and who it affects the most.
Let's leave the US dollar behind now and move on to the Euro, where the pound was certainly the stronger of the two currencies last week. We finished up with an exchange rate of 1.2701 on the Friday so it will be interesting to see whether the pound managed to claim a better rate for the week to come.
As it turned out this was going to be something of an up and down week. Monday saw a slight decrease as the pound slipped back to claim just 1.2626 Euros to the pound, but this was only the beginning and there was a lot more to come.
Tuesday brought another dip however, and by the end of a vigorous day's trading we were left with an exchange rate of 1.2577. It was beginning to look as if it was going to be a down and down kind of week, but Wednesday soon set things right. By the end of that day the pound had fought back with its usual strong and robust characteristics, and it was now claiming 1.2620 Euros to the pound.
The real question now was where were we going to go from here? Would we see more fighting spirit from the pound, or would the Euro show some of its mettle and be the one to gain the upper hand once more?
As it turned out the pound got the winning edge on Thursday as it got back to 1.2626 again – the exact same exchange rate it had been claiming on Monday. So the only question left now was which currency would grab that final win at the end of the week, and if it was the pound would it be enough to record an increase for the week as a whole?
The answer soon came by the close of trading on Friday, as everyone set off for the weekend. 1.2582 was the finishing figure, meaning that the Euro had fought back on that last day of the week, and indeed it also managed to win over the week as a whole. The pound was claiming 0.0119 Euros less per pound than it had the week before, so there was clearly not going to be any celebrating here this week. We will have to see whether it can pull back anything next week instead.
Now last week we saw that the pound did well in Hong Kong, but given that this week's results were a little mixed so far – with a good performance in the US but a weaker one in Europe – what would the pound's head to head with the Hong Kong dollar bring?
14.075 was the closing figure for the previous week, and by the end of trading on Monday that had improved to 14.300 – a good start but was there still room for more improvement?
Apparently there was. Tuesday brought more good news for anyone wanting to get as many Hong Kong dollars to the pound as possible, as the exchange rate went up to 14.381. Could we be witnessing another good week against another dollar currency, perhaps?
Wednesday seemed to confirm that this may be the case, with an exchange rate that pushed up to 14.394; not a huge increase but still very much worthwhile. And by the end of Thursday it looked as if the constant increases of the week were going to continue, as the numbers went up still further to 14.425.
The only question remaining now was whether or not the pound could carry on pushing the exchange rate up for the last day of the week, and if it didn't would it be able to hold on to an increase over the week as a whole – or would it all be wiped out in a single week?
The answer was that by the close of play on Friday, the exchange rate had slipped back to 14.319 – a drop of 0.106 overnight, but still an increase of 0.244 from the same time the previous week. So all in all, despite that last minute drop it was a good week and one to remember as far as the pound was concerned.
Let's move on to New Zealand now, where we saw a drop in the exchange rate last week so we were hoping for something better this time. 2.6677 was the figure we started with, so let's see what happened once the markets opened for business on Monday.
Fortunately we had something of an improvement on Monday, with 2.6724 being the closing figure on that first day's trading of the week. Could this be the start of something worth celebrating perhaps?
Tuesday brought more good news with the pound claiming 2.6907 New Zealand dollars by the end of the day. We have seen this happen before though – the week starts off well and then everything changes in the last two or three days. Was this going to happen here as well, or could the pound produce a performance that was worth hanging on to?
Wednesday's figure of 2.7120 seemed to indicate that any drop was going to be insignificant in the scheme of things, but as Thursday drew to a close it was clear that it could still happen. Thursday's closing rate was 2.6984 – indicating that Wednesday's figure was a short lived blip that was nice to appreciate but not long enough to really be of any benefit.
And we finished the week off with the pound claiming 2.6868 New Zealand dollars to the pound, meaning that although we had lost a lot of the gains made over the course of the week, we were still 0.0191 up on this time last week, so it was still something to celebrate.
But would the picture be the same over in Australia?
2.2234 was the figure we went into the week with, and that soon dropped on Monday as we ended up at 2.2015. A slight increase to 2.2025 on the following day gave us a slight amount of hope, but it was very slight indeed.
Things started to improve on Wednesday though, as the midweek closing figure finished up at 2.2159. What would happen in the second half of the week though?
Well there was another dip on Thursday, as the exchange rate went down to 2.2084, but we managed to pull back some ground on the final day of trading and finished with a rate of 2.2225. That is only a very slight drop overall of 0.0009 since this time the previous week so there was nothing much to worry about this time.
So something of a mixed week overall – some good results, some not so good and one or two barely any different, so we'll see whether this trend is one that is going to continue, or whether there will be anything else more dramatic to report next week.
It seems as if some currencies are doing rather better than others in all the uncertainty that is flooding the currency markets at the moment, and one of the best winners of all seems to be the yen.
While the US dollar is doing better than it has in months gone by, it cannot really compete with the yen, which is certainly holding its own at the moment. The dollar clearly has some work to do here.
There are times when some currencies struggle to perform well and are consequently pegged to other ones to maintain a good performance.
But that isn't the case with the ringgit, because while some people think it should be pegged the people in charge disagree. So as it stands it will continue to move ahead as it is.
While the pound is struggling somewhat in some areas, it is clear that it is doing well in others – including Canada.
This is one exchange rate worth keeping an eye on, as the pound seems to have the upper hand at the moment.
Sometimes, amid all the complications and hassles of the modern money and currency markets, it is good to get back to basics and remember how money all started.
To this end there is no better place to go than to check out the currency page of information on Wikipedia. This can be found at http://en.wikipedia.org/wiki/Currency, and it delves into the history of currency right from its earliest beginnings. It's worth looking at as it is very different from what we are used to today!
So there we are with another round up of how the pound is performing across the world today. Needless to say we shall be back next week to see whether it has improved or declined once more.
See you then.