Posted by Allison on 24 April 2017, 13:05
No sooner had the long Easter weekend come to an end than Prime Minster Theresa May was standing outside 10 Downing Street, announcing a snap General Election on 8th June. How would the pound react to that news on the markets?
Well, we knew the week would be shortened, with no trading on Easter Monday. However, Tuesday began on 1.2540 against the US dollar, and with the PM’s announcement of a General Election in June, the British pound had increased to 1.2660 by the end of the day. Better yet, it increased even more the following day, rising to $1.2855 against the US currency. So, while it slid a little on the final two days of the week, it still finished in a much better position on $1.2778 there.
Could it do just as well against the euro, too, though? We opened trading there on 1.1797 on Tuesday morning, and post-announcement the pound closed the day on 1.1851. And yes, another encouraging day came on Wednesday, too, as the pound closed on 1.1986 against the euro. We then saw a loss on Thursday but another increase on Friday, so by the time the week was done, the pound was settled on 1.1944 there – much better than the opening rate had been.
Moving on to the Hong Kong dollar now, the British pound began trading on 9.7509, and once again, there was an increase on Tuesday that took the pound to 9.8417. This was boosted still further – and quite considerably – on Wednesday, leading to a closing rate in that part of the world of 9.9960. So, while the final two days saw some levelling off of the exchange rate, the pound still finished the shorter week in good order on 9.9366.
Our fourth stop is one we can never predict, with the pound going up against the New Zealand dollar. Here, we began on 1.7906, and that predictable increase was see here as well – and again, the good results occurred over Tuesday and Wednesday. We finished the midweek point on 1.8318. And again, the pattern of a slight reduction came on Thursday, dropping the pound back to 1.8232, before a final rise took place on Friday, allowing us to finish strongly on 1.8247.
Finally, let’s see if the Australian dollar would drop against the pound too, although we can be fairly certain of the answer. The pound opened on 1.6548 after Easter, rising to 1.6776 on the news issued by the PM. Wednesday reinforced the good news, taking the pound to 1.7086 against the Aussie currency. Finally, a drop back to 1.6983 occurred by Friday night, but once again, this was marginal and did not damage the good improvements made thus far.
The pound did exceptionally well here, rising from 1.6598 to a massive 1.7215 by Friday night – quite a jump in just four days.
The jump here was less pronounced, but it still meant the pound increased its value from 1.2606 to 1.2756 this week.
Here, the pound started on 139.669 before rising to 141.714 on Wednesday. However, it then dropped back to 139.899 again – still a rise, but a smaller one to the one we had perhaps expected.
All in all, this was a strong week for the British pound. News of the General Election was met by positivity all around, and while we now enter a period of campaigning on behalf of all the political parties, it doesn’t seem to have dented the position of the pound. Whether this will continue for the weeks to come, remains to be seen. However, for now at least, the position of the British pound on the currency markets is stronger than it has been for some time.