Posted by Allison on 24 March 2009, 09:54
With every week that has gone by, we've become more nervous of what the pound will do next, as its performance in recent times has been less than satisfactory.
It may seem unbelievable to say, but over the course of the last two weeks (that's just fourteen days, to make sure we have things clear here) the pound has dropped almost ten whole cents against the US dollar. So would we see even more of a drop this week?
The week before we did at least see some upward movement in both New Zealand and Australia, so it will be interesting to see what we will be reporting this time... and we are about to find out what happened in the last few days, so keep reading.
So let's start where we usually do and take a look at what happened between the above dates as far as the British pound versus the US dollar is concerned. For the previous two weeks in particular the pound took a determined nosedive... but would we see any glimmer of hope this time? Even a steady rate would be an improvement on recent weeks, so let's find out what we got.
1.7604 was the final figure we were left with from the week before, so Monday's figure of 1.7609 was indeed something to think about, because while it only signified the tiniest of improvements it was going in the right direction at least – and it was certainly better than another drop.
Tuesday brought more news that wasn't bad for once (we hasten to call it good news, because the pound has a lot further to go before we can get into that territory) as the exchange rate went up to 1.7613, although Wednesday seemed to redress the balance somewhat as things went back down to 1.7573.
We were in different territory here though, since there were no big drops and nothing catastrophic about the figures. What would the rest of the week bring? Could we hope for a slight improvement to end the week with, or was that simply hoping for too much?
Well by the end of the following day it looked as it we were getting our answer, as Thursday saw the exchange rate drop to 1.7546. It seemed for a moment as if the pound was going to finish on a low note again this week, although anything short of a huge drop on that final trading day of the week was clearly going to be seen as a victory when held up against previous weeks.
So what did we end up with on the Friday? In short, the answer was 1.7666 – which was up on the previous day and actually turned out to be an increase over the figure of this time the previous week of just over half a cent. That's not really a figure to be celebrating as it doesn't represent much of a change at all, but when you compare it to the figures we have been talking about in recent weeks – and especially the fact that we were looking at a loss of seven cents this time last week – this is clearly a victory of sorts. It makes you wonder what kind of figures we will be revealing next week, doesn't it? Is this the start of the long road back? Or is it merely a blip on the screen that has been recording the downfall of the pound of late?
Let's move over to Euroland now, and see whether the pound could possibly hold its own against the Euro. There wasn't a lot between them the week before, so we were hopeful of a change in fortune this time around.
1.2356 was the closing exchange rate we were left with last time, and Monday's opening play finished with that rate improving slightly from our point of view to 1.2388. Was this a sign of things to come? Could the pound possibly try to repeat its stronger performance against the US dollar and claim something of a victory against the Euro as well?
As it happened, Tuesday seemed to indicate that it could indeed happen that way. By the close of play on that day, the exchange rate had improved to 1.2453, which no doubt made some Brits wonder whether their currency was once again worth exchanging in order to grab a quick break abroad.
But it was worth waiting for further good news, as this was turning out to be a good week for the pound – especially when compared to the past performances. Wednesday saw another slight increase to 1.2468, and by the time we got to the end of Thursday we had broken into 1.25 territory. That exchange rate was 1.2592, and it left us wondering whether we could actually pull off the seemingly impossible and get to the 1.26 range by the time the week's trading finished.
As it happened that wasn't to be, but closing on 1.2559 was still something to celebrate, as it represented a 0.0203 increase over the figure we were left with this time last week. Was this just one good week for the pound – the eye in the middle of the storm perhaps? People with a negative point of view would certainly say so, although those who are desperately trying to think positively would be determined to say this is the start of the long road back. We will see.
Our next stop on this weekly round up of how the pound performed in the rest of the world is Hong Kong, where the previous week saw a finishing point of 13.743. What would we be reporting this time around?
Well there wasn't an awful lot to report on Monday, with the closing rate dropping ever so slightly to 13.740. Small changes like that we can live with however, so it would be interesting to see whether they would remain on the small side, or whether they would become larger and more noticeable.
13.738 was the next figure that came at the end of Tuesday's trading, representing another small drop for the pound. This was beginning to look like a sadly familiar story for us.
Wednesday continued that trend as the final rate for the day was pegged at 13.705, and that was swiftly followed by 13.685 on the following day. The only question now was how much more it would drop by on the last day of the week, as it had continued to do all week.
And that was where we got what the Americans would probably call a curve ball. Because from that downward position we actually managed to finish on 13.776 by the time we finished trading on Friday – a sudden and unexpected rise that gave us an improvement of 0.033 on the previous week. This was actually turning into a week to celebrate, at least to some extent.
Now we saw the previous week that the only good news came out of New Zealand and Australia, so what would happen this time given that the pound had reasonably managed to hold its own elsewhere?
2.6500 was our last effort and closing exchange rate in competition with the New Zealand dollar last time, so did we manage to hold our own here too?
Well Monday didn't see a very good start to the week, as the pound lost some of the sudden gain it had made on the previous Friday, sliding back to 2.6122 New Zealand dollars. Tuesday saw another slight decrease in fortunes as the pound slid back to 2.6114, and you would have been forgiven for thinking that we were going to be seeing a downward trend for the rest of the week.
And then came Wednesday, and a closing exchange rate that was a very welcome 2.6331. Now it was just starting to get interesting, and indeed it continued to do so as Thursday's closing figure leapt up to 2.7082. Surely we couldn't fall back too far now to close out the week?
The answer came swiftly. We finished up with a rate of 2.6942 – a fall back from the previous day but an impressive 0.0442 up on the closing rate from the previous week. Not a bad result - and another good piece of news to add to the growing pile of reasonable results achieved by the pound this week.
So it's over to Australia now and a look at whether or not we could improve on the 2.1757 we closed at the week before. The first day didn't look too promising as it finished on an exchange rate of 2.1489, quite a drop over the previous trading day. Could we improve on that and do better as the week went on?
Tuesday certainly seemed to point in that direction as the final figure had gone up to 2.1652. Wednesday continued the upward trend as we improved the result to 2.1871. This was looking increasingly promising and there was still more good news to come as well.
By the close of play on Thursday we were looking at an exchange rate of 2.2067, and although that dropped back slightly to close out the week at 2.1906, this was still a great performance in a week that saw the British pound finally getting some reasonable results right across the board. Anything was better than the results we've seen elsewhere, and there is no doubt that this was a good week.
It would be good if this proved to be more than just a temporary affair, but it will remain to be seen whether or not the pound can hold its own for another week after this one.
The Bank of New Zealand cut its interest rates last week and while they are still high, a so called 'shallow recession' has been said to be in effect in the country.
They are not alone though as many other countries are also struggling to get to grips with events in the world as a whole.
Although we have seen a great week in terms of the renewed strength shown by the pound – when compared to the losses seen in previous weeks – there is no doubt that a recession isn't far away.
The only question at the moment seems to be when it is going to happen, rather than if. We can only hope to be proved wrong in this case.
The US dollar is doing increasingly well against the Euro as tough times all round the globe continue to cause problems.
The dollar wasn't looking so good a few weeks back but that all seems to be forgotten now.
The newspapers will always give you a good grounding in what's going on in the financial world, but there is one website that is very user friendly when it comes to finding out more about things to do with money, and that's www.metro.co.uk. Apart from the news section there is also a specific section on money, and it provides a good first look at what is going on in the world at present.
So here we are at the end of another report and at least there is some good news this week as far as the fate of the pound is concerned. But it is easy to forget that things are still pretty dire for many currencies and indeed many countries, as the threat of recession is never far away.
We can only hope that things will start to improve again sooner rather than later, and that this week's results with the pound will be the start of it at least being able to hold its own, if not improve to any great extent yet.
We'll be back here as usual next week to see the next chapter in this ongoing saga. See you then.