Currency Note

Pound weakens to 35 year low against dollar

By Erin Harding March 19th, 2020

pound weakens

The pound weakened to a 35 year low against the dollar and to its weakest level against the euro since 2009. New Bank of England Governor, Andrew Bailey, said that there is no “single story” to sterling’s decline.

The EU has now imposed a 30-day travel ban to mitigate the impact of coronavirus, turning non-EU citizens away from airports and borders. The euro was fairly weak yesterday but remains strong against the pound.

The dollar, on the other hand, is outperforming most major currencies as it continues to benefit in times of crisis.

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GBP: Bailey says there is no “single story” to the pound’s decline

The pound weakened to its lowest level against the dollar since 1985 yesterday and was also weak against the euro. New Bank of England Governor, Andrew Bailey, has said that the Bank is watching sterling very closely and added that there is no “single story” to the pound’s decline.

It’s thought that the Bank of England will announce a fresh batch of quantitative easing and possibly another interest rate cut at their next meeting.

Scotland, Wales and England have now announced school closures from Friday. The government has said that they will provide more information on what this means for the children of key workers and those due to take important exams.

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EUR: EU closes its borders

The euro was weak yesterday against the dollar but stronger against the pound, after the ECB reassured markets that it would back Italy’s government by intervening in Italian debt markets via Italy’s central bank.

ECB board member, Isabel Schnabel, said yesterday that “the ECB is ready to do everything in its mandate to counter market turmoil that disrupts monetary policy transmission.”

Travellers from outside the EU are now being turned away after the bloc imposed a 30-day travel ban to mitigate the impact of coronavirus.

German IFO data for March came in this morning at 87.7, a slight decline from the previous reading of 96.1.

USD: CEOs urge Trump to act boldly

The dollar continued to perform strongly across the board yesterday, hitting multi-year highs against a range of currencies. The greenback is benefitting from its safe haven status during this time of crisis.

Treasury Secretary, Steven Mnuchin, warned senators that without action, the coronavirus pandemic could drive the US unemployment rate to 20%.

The Dow Jones Index dropped below 20,000, wiping out all gains made since Trump’s Presidency. CEOs from America’s biggest companies called on Congress to “act boldly” to limit the economic affect of the pandemic.

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