BOE rate cut and budget aimed at tackling COVID-19 pandemic
GBP found some relief after a double barreled government stimulus package
USD weaker on Trump plans – lacked detail
The Pound rallied on Wednesday after the government released a 30 billion pound stimulus plan straight aftert he Bank of England cut rates to lift the UK economy. The plan is meant to tackle coronavirus, in what now is a global pandemic and the effects that will have on not only the UK economy, but the global one. While a spurt of buying sent the pound up as much 0.7% to $1.2962 on the dollar in early trading, the momentum subsided by the budget announcement leaving the British currency up only 0.4% on the day at $1.2927 as the interest rate cuts were larger than expected.
Against the euro, its performance was more lacklustre, with the currency pair trading broadly steady around 87.43 pence.
EURUSD reversed gains over Wednesday as markets look to safe havent currencies. From a high of 1.15, the pair currently sit at 1.1268. The euro has been in a good place in the past five weeks after being sold off aggressively since the start of 2020.
The USD fell after markets were left disappointed by Trumps plan to deal with coronavirus. The greenback dropped 1% to 103.32 yen, fell as much as 0.6% to $1.1333 against the euro and lost 0.6% to the safe-haven Swiss franc, while stocks plunged. Trump announced on Wednesday a ban on travellers from 26 European countries entering the United States for a month. Trump’s address came with markets already in turmoil amid a string of increasingly dire news on the coronavirus. The longest bull run in U.S. stockmarket history has ended, with market talk that selling to cover margin calls was keeping gold and bonds from rallying.
Market update byAmir Mehrad
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