BoE Rate cut sees Pound claw back after Flash crash
20 March, 2020
Yesterdays announcement by the Bank of England that Uk interest rates would be cut to 0.1% offered a small amount of respite in what has been a torrid few weeks for the currency. We have seen the pound lose significant ground across the board but significantly 13 cents against the Euro, and 15 cents against the Dollar in as many days. The impact of the Coronavirus has been far reaching, and as investors flock for more liquid assets in such uncertain times. The USD and Euro have strengthened against the Pound. Add to this that as a result of the Pandemic, UK-EU trade negotiations have been shelved, and the UK government have been vocal in saying despite this that no extension to these talks would either be applied for or accepted. As s result the probability of a No-deal Brexit come 31st December is becoming quickly more of a reality, and so markets and exchange rates are positioning themselves accordingly.
Whilst in the short-term the BoE rate cut has afforded the Pound some breathing room, allowing it to claw back around 3.5 cents against both the Greenback and the single currency, in the current circumstances it seems sadly inevitable to expect further losses.
As the impact of Covid 19 deepens, more investors will flock to the liquid safehaven currencies of the Euro and Dollar, and the clock ticks down to try and achieve any Brexit deal at all. This combined with a potential UK lockdown is certain to have an impact in the coming weeks and months.
Whilst there is UK public sector data borrowing today at 09.30 and Canadian retail sales at 12.30,, these reports will likely have little impact as markets and traders stay focussed on global affairs.
Should you have any upcoming requirements you would be well advised to consider them now, ahead of what will be a turbulent time on several fronts.
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