Posted by Allison on 18 October 2016, 14:22
There have been few weeks that have begun with us feeling trepidation at quite the same levels we have felt this week. Would the British pound be in a position to perform at a stronger level this week, or was there more bad news in store?
The week got underway with the British pound standing at 1.2329 against the US dollar. There was some improvement on day one, taking the pound up to 1.2390 in the process. Was this the beginning of a fightback? It turned out not to be the case, because the next three days brought the pound even lower, with three losses in a row. By Thursday evening, the pound was down to 0.2206. We did manage to improve on that to achieve a closing rate of 1.2236 for the week, but this was still lower than the opening rate we’d seen on Monday morning.
We began on 1.1067 against the euro, and had a reasonable start here as well, rising to 1.1102 as a result. However, the following day was worse, dropping back to 1.1082. We didn’t have the same three-day drop we’d seen against the dollar though. Instead, we saw an up-and-down pattern throughout the week. This was better, but it still resulted in some uncertainty on a day-to-day basis. Finally, though, we managed to improve on our starting rate by finishing on 1.1122.
Over in Hong Kong, the pound began trading on 9.5653 this week. We half-expected the same outcome as we had seen against the US dollar though, and unfortunately we were right in doing so. The first day improved the pound’s standing to 9.6134, before the same three days’ of results came in, taking the rate down to 9.4699. Even a slight rise to 9.4942 on Friday could not erase those significant losses.
Our next stop will determine whether the pound would drop further against the New Zealand dollar as well. The pattern here is often very different, but it could provide clues as to how the pound would fare against the Australian dollar too. We opened on 1.7254 before climbing to 1.7372 on Monday – quite a rise for a single day. However, this would turn out to be one of only two rises this week. We dropped to 1.7351 on Tuesday before climbing again to 1.7358 the day after. Unfortunately, the final two days did not go our way. Instead, we fell to a closing rate of 1.7248 this week – although this was only slightly down on the opener.
Finally, let’s determine if the pound could do better against the Aussie dollar. We opened here on 1.6265. We had an encouraging start to the week, improving to 1.6309 on day one. However, that would end up being as good as it would get, because the next four days were all disappointing. They also resulted in the final exchange rate of the week amounting to 1.6039 – worse than perhaps we had thought.
Here too there was bad news, as the pound fell from 1.6362 this week to a low of 1.6110 on Friday.
At least here we had a very marginal drop and nothing more – going from 1.2114 to 1.2111.
More bad news to complete the week – a fall from 140.443 to 139.900 against Iceland’s currency.
It’s easy to see just how troubled the pound is at the moment. Uncertainty over the situation with Europe is no doubt leading to this situation, although many still believe Brexit is ultimately going to be the right and the best thing to happen.
But for now at least, the British pound is going to remain suppressed against the other currencies, so perhaps we should expect more of the same to come.