Troubled Times for the British Pound

Posted by Allison on 20 August 2018, 19:29

Welcome to our latest currency report. This week, we see how difficult things could be for the British pound. Uncertainty is the theme here.

An overview of the currency markets for August 13th – August 17th, 2018

The British pound has weathered some uncertain times just lately. Would it continue this week? It began with a slight drop against the US dollar, as the opening rate of 1.2775 slipped to 1.2765 on Monday. The pound then rose to 1.2772 the next day, before dropping again on Wednesday. While it did do better on the final two days of the week, the overall picture was one of another loss. The pound finished Friday evening on 1.2716, so it was lower than it had been, and veering closer to 1.26 territory as well.

We made a good start against the euro, however. The pound began trading on 1.1151 here and enjoyed three good days against the European single currency. This took the pound to 1.1219 by the time Wednesday evening arrived. However, three solid days do not guarantee a good week. This was borne out by experiencing two poor days to close the week. By the time the pound reached the end of trading on Friday, it had dropped to 1.1163. Fortunately, this was still slightly higher than it had opened the week on, so it was a victory of sorts.

The progress – or lack of – against the Hong Kong dollar was a mixed picture. From an opening exchange rate of 10.028, the pound endured three good days and two not so good ones. However, the initial drop to 10.020 on Monday meant the pound was already in trouble. It never regained the opening rate, and indeed it suffered a notable drop of 0.557% on Wednesday. This took it to 9.9707. While the final two days were better, it could not regain the 10.000 territory it had started with, ending instead on 9.9818.

Early signs were good against the New Zealand dollar. The pound climbed from 1.9364 to 1.9405 on Monday. However, a drop to 1.9347 on Tuesday made things harder to bear. It turned out we had seen the best rate of the week already, with only disappointing news to enjoy from then on. By Friday, the closing rate for the pound could only muster 1.9262. Once again, things had not gone the way of the British pound.

Could we therefore predict another disappointment against the Australian dollar? Well, we did have four good days and one disappointing one here, so the balance was in favour of the pound for once. Opening on 1.7479, three good days took the pound to 1.7579 by Wednesday night. While it dropped to 1.7483 by Thursday evening, a last-minute rise saw a closing rate of 1.7493 on Friday. So, while there was still a loss here, at least it was minimal.

 

Notable events in the world of currency

A mild loss against the Canadian dollar

You know it is a sad week when you are positive about a small loss. Here, the pound went from 1.6729 to 1.6718 by the end of the week.

 

A more pronounced loss against the Swiss franc

The pound didn’t perform well here either. From a starting rate of 1.2702, it fell to 1.2657 over the week.

 

Slightly better against the Chinese yuan

The pound managed a slight rise here – all achieved on day one, as from there on the news was downhill all week. It opened on 8.7502 and climbed to 8.7917, before falling to close on 8.7546 on Friday night.

 

It was not a week where good news was easy to find for the British pound. Perhaps we can expect the uncertainty to continue until Brexit is completed. However, beyond that point it may be harder still to predict any stability for the currency. As with all situations developing at present, we must wait and see what happens next.

 

We’ll be here next week, as always, to report on the latest developments for the pound.

 

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