- Pound lower once more as markets anticipate rate cuts
- USD falls as Fed cuts rate
Sterling fell against the dollar and euro on Wednesday as an unexpected rate cut from the Fed fueled talk that we could see the Bank of England follow. As a result, sterling fell to 4-5 month lows, around 1.2780 versus the dollar and 1.1450 versus the euro. Money markets now have a rate cut in the March meeting at 80% chance, which means the UK could see two rate cuts in 2020 compared to none a few weeks ago – this could weigh on the pound significantly.
- The single currency moves up to two month highs versus the dollar post Fed emergency rate cut. It also has been one of the currencies to benefit more from the Fed cut as traders continue to unwind their carry trade.
- The dollar fell on Tuesday as rate cuts were deemed insufficient to offset the effects of the coronavirus. There was disappointment in the market that the Fed did not lay out specific responses to the coronavirus has reinforced the view that policymakers have fallen behind the curve.