Posted by Allison on 5 October 2009, 16:18
If you have been reading the reports of the last two or three weeks, you will know that the British pound has been going through the mill. Losses across the board against the five major currencies we always take a look at have become almost the norm. Last week’s report saw losses bad enough to make us wonder how low the pound will go. Could we see exchange rates dipping below the $1.50 mark against the US dollar again, for example?
The pound did dip below the $1.60 mark last week, which made us wonder whether the slide of the past few weeks would continue into the future as well. Obviously lower figures don’t harm everyone, but if you happen to be one of those people who are thinking about a holiday somewhere in the world, you will certainly want better exchange rates on your currency converter.
Last week the pound took a pummelling from every single one of the main five currencies we always look at. The US dollar, the New Zealand and Australian dollars, the Hong Kong dollar and the Euro all took what they wanted from the pound, making sure their own exchange rates were looking good in the process. Could we expect another dismal week this time around, or will this be the point at which the pound will start fighting back?
There is only one way to find out of course, and that is to check the exchange rates and see what actually happened. Here’s hoping that the pound was able to show some strength – so we at last have some good news to report to you. Shall we begin?
So here we go with our first glance at the currency markets for last week. Our first stop as always is the US dollar, which certainly saw off the pound the previous week. After a dreadful week for the pound it lost more than three and a half cents, leaving it struggling home on 1.5967 against the dollar by the close of the week.
So what could it achieve this time – if anything?
Well Monday certainly didn’t start on a good note. The dollar made its position even stronger by the end of the day, when it forced the pound to finish on 1.5878 in total. Was this the beginning of another downhill slide?
Tuesday saw some better news though. The pound may not exactly have been turning the corner, but it did put in a better performance and by the day’s end it was standing at a more impressive 1.5956. That was a mere 0.0078 up on the previous day, but it was heading in the right direction at least.
But there were still three days to go, and that was a big gulf to cross before the week was out. The midweek point certainly went in our favour though, because by the time Wednesday was finished the British pound had reclaimed an exchange rate of 1.6103 against the US dollar.
That may have been something to celebrate, but let’s not do it too soon, just in case it is a peak. And as we know, a peak is the highest point – to be followed by a downhill slope.
And as things turned out, Wednesday’s figure was indeed a peak. By the time Thursday’s tussling had ended, we were sitting rather lower on a figure of 1.5962. Was this the sign that there was worse to come on the final day of the week, or could the pound regain some strength from somewhere to make sure that it was able to finish the week better than it had started?
At that moment it was clear that the pound may still be able to finish somewhere around the same mark as it had started from. But by the time Friday was over, the pound was standing at 1.5849. That meant it had lost out once more against the US dollar – although not by as much as it had the previous week. This time the loss was 0.0118, so at least the rot had slowed down somewhat.
But what of the pound’s performance against the Euro? We lost over two cents against the European currency last time, leaving us sitting on a poor exchange rate of 1.0884 by the end of that week. Could we move away from the ever beckoning point of parity, or were there improvements in the pipeline for the pound?
Let’s find out. Monday started us off with a loss, although it was a relatively small one which left us on 1.0838 at the close of play. Now we would be able to see where that initial step would take us for the rest of the week. Would it be the start of another long slide down, or would we gain some traction and actually improve our standing for a change?
Tuesday was certainly a lot better, giving us a final exchange rate for the day of 1.0967. Having added on more than a Euro cent during the day as a whole, we could expect to feel a little more confident for the rest of the week – even if that confidence was tempered with caution.
The rate of increase slowed down on Wednesday, but the fact that it was still an increase was certainly something to report. By then it gave us an exchange rate of 1.0997 – just short of the 1.10 territory we would dearly love to get back into.
Well we still had two days in which to do it this week, but it wasn’t going to happen just yet. By the time Thursday came to a close we were slightly lower against the Euro on 1.0978. Could we turn things around yet and reclaim the 1.10 territory we hadn’t seen for a while?
Unfortunately we don’t have any good news to report in that area. What was good though was that we finished on 1.0902 – not too low considering the bad results we had seen last time around. And in fact we had actually managed to increase our standing ever so slightly since last time. Only by 0.0018, but that was better than another significant loss, and it was headed in the right direction for once at least.
So with that piece of mildly good news to think about, let’s move on to our next stop of Hong Kong and its dollar. Last time we lost 0.283 during the whole week, leaving us with an exchange rate of 12.375. Could we repeat the work we had done with the Euro and try and improve on that, or were we in for another big loss like we had seen last time?
Let’s find out what the answer turned out to be. Monday didn’t give us the strong and healthy start we would have liked, as we finished up on 12.306 by the end of the day. There were still four more days to go though, so anything could – and probably would – still happen at this point.
And Tuesday certainly made that evident, as the British pound showed some of its true grit and managed to pull back to 12.366. That was quite a good showing for a single day, so what could it achieve from that point on? Would it be able to build on that increase and deliver an even better result for the remaining three days of the week? Or would there be a fight back from the Hong Kong dollar and a better rate for them by the time the week was out?
Wednesday was certainly an impressive day for the pound – it managed to push the exchange rate up to 12.480, adding on 0.114 in just twenty four hours. The question was whether it could hang on to that increase or not. And with two days still to go anything could (and probably would) happen.
This much was proved to be true as on Thursday we lost virtually all the increase we had snagged the day before. That day saw us end up on 12.370, and it certainly succeeded in putting doubts in our mind as to whether we could make this a successful week for the pound in Hong Kong.
And finally Friday showed us that it wasn’t going to be our week. We finished up on 12.283 at the close of play, meaning that we had lost out on a total of 0.092 overall. It could have been worse, but it could also have been a lot better.
Still, let’s move on swiftly to see whether we could succeed in New Zealand. Last time we lost over seven cents and finished on a weary 2.2271 New Zealand dollars. Could the pound try to regain any of those losses this time?
Monday actually saw very little difference at all at this stage, as we finished up on 2.2270. You got the feeling that we would settle for a week of tiny changes like this – anything would be a welcome respite from the huge drops we have seen in this particular exchange rate over the last couple of weeks.
Tuesday saw a reasonably healthy jump upwards though, as we ended on 2.2330. An increase of over half a cent may not be huge, but it would be enough to give us confidence in a final exchange rate for the week that might just be higher than we’d seen the week before.
It was clearly too soon to hope for too much though, and we were held firmly in check on Wednesday as we finished the day on 2.2310. With just two days to go, we were starting to wonder whether this would be another loss for the week.
Thursday’s closing figure of 2.2112 destroyed any confidence we may have had, and by the close of play on Friday, we were back to 2.2195. That was slightly better than the previous day, but it wasn’t good enough to amount to a successful week. All in all, we lost out on 0.0076 – so it could have been worse.
Finally we have Australia to take a look at, and the exchange rate between the British pound and the Australian dollar. We lost three and a half cents last time around, which landed us on a closing rate of 1.8451. Could we try and regain some of those losses this week, or would we be adding to them?
The latter looked like it could be coming true to begin with, because by the time Monday was finished with we were on 1.8323. We dropped back even further the following day, finishing on 1.8304 and really giving ourselves something to think about. What would happen on the next three days?
Wednesday had worse news to come as the exchange rate dropped further to 1.8251. Was this proving to be a downhill slide for the whole week, or would we end up with a better finish in store?
Thursday dropped even further to 1.8157, and even though we put in a final spurt to finish on 1.8358 on Friday evening, it wasn’t quite enough to leave us in a better position than we had been in the previous week at this point. In total we had lost out on 0.0093 over the week as a whole. At least this was a lot less than we would have lost if we hadn’t had that final scramble to increase our exchange rate.
So it was another bad week for the pound, although perhaps not as bad as it could have been.
You couldn’t keep up with these two last week, as the Euro went between 1.46 and 1.45 throughout the week. From 1.4650 on Monday night it finally finished on 1.4537 by the close of Friday.
There were some interesting tussles with the US dollar last week; the Canadian dollar finished Monday on 0.9140, before attaining a high of 0.9321 just two days later. But by Friday night it was back down to 0.9168 again.
A good start and a good finish were in store for the Chinese currency last week. It started at 0.2054 before dipping to a low of 0.2029. But it soon perked up again and finished on Friday by attaining an exchange rate of 0.2051.
You can always count on the Bloomberg website to report on some of the best currency related stories out there at the moment. And this was certainly the case on the 3rd October when it reported on the weakening pound against the US dollar. You can read more of this fascinating report at this link.
So there we have it for another week – and another rather disappointing week at that for the British pound. But the rot isn’t as bad this week as it was the previous week. Could this be the stage at which we start to turn the corner? We’ll be back next week to find out. We’ll see you then.