Last week compounded sterling weakness as we saw traders dump sterling daily

16 March, 2020

Simon Eastman

The last week compounded sterling weakness as we saw traders dump sterling daily, as Coronavirus took hold.

We are ever-changing on advice from the government as the virus unfolds but one thing that isn’t changing is the effect this pandemic is having on the economy and the pound. We have seen the Bank of England cut 50 basis points off the base rate which helped in the immediate term but not for long as the pound slide continued.

We closed on Friday at a low point, but by US close we were a couple more cent down against the euro at levels last seen in August 2019. Overall GBP/EUR lost 5 cents last week. Those looking at buying overseas last summer will be aware to get to that low, we still have a way to go so if you have a currency purchase to make, it might be worth jumping in, in case this slide carries on.

The Fed cut interest rates again on Sunday by 100 basis points and added to its current bond holdings by a further $700 Billion, in measures to shore up the economy in order to deal with the impact from Coronavirus.

Coronavirus will take centre stage this week for sure, but we will also have a few major eco stats for markets to note (or not, as the case may be)

Tuesday – UK unemployment and average earnings and German ZEW economic sentiment survey.

Wednesday – Canadian inflation, US Fed meeting and NZ GDP.

Thursday – AU unemployment rate, Canadian retail sales.

With the current uncertainty surrounding COVID 19, we expect markets will be jittery so anyone with a currency requirement over the next month or two, might be prudent to trade sooner rather than later. If you agree, call one of the team today to discuss your options.