Return to Currency News Tuesday February 25th 2020

GBP falls on rising fears on the economy

Headlines

  • GBP falls on rising fears on the economy
  • USD continues its march forward – possible interest rate cuts to counterbalance it?
  • German GDP data in line

GBP

  • (Reuters) – Sterling fell on Monday as rising fears about the economic impact of the spreading coronavirus encouraged investors to seek safety in the U.S. dollar. The British pound dropped as investors scrambled out of assets deemed riskier in favour of the dollar. Most analysts see the U.S. economy as relatively well-shielded should the coronavirus hurt global growth significantly. The pound’s weakness on Monday was largely a dollar strength story, with hedge funds turning cautiously optimistic on sterling in recent weeks. The latest figures show funds have ramped up long positions in the pound to near two-year highs.

EUR

  • The euro slightly fell on Tuesday morning as German GDP remained in line although private consumption missed. Markets may take this as another sign that the european economy is under pressure. EURUSD continues to trade near three year lows currently sitting at 1.0850. 

USD

  • The dollar continued its march forward on Monday and into Tuesday as fears of a rapid coronavirus pandemic spread. The stock markets posted their worst day performance in nearly two years and investors continue to hold the safe haven greenback. There is a possibility that such strength in the dollar could see the Fed move to cut interest rates, something that the market may start to take into account. Currently GBPUSD sitting at 1.2952 while the dollar basket is slightly off recent highs. 
Amir Mehrad
Market update by Amir Mehrad

14 years experience in deliverable foreign exchange, over 7 as CEO of Effective FX

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