Return to daily updates Tuesday March 3rd 2020

Sterling falls heavily on Monday

Headlines

  • Sterling falls heavily on Monday 
  • Euro continues to move away from three year lows verus USD
  • Possible rate cuts globally to counteract market concerns

GBP

  • Sterling fell heavily versus the Euro on Monday as fears of coronavirus took over the markets. A combination of a flight to safety currencies such as the dollar and yen, and an unwinding of the “carry-trade” saw GBPEUR move from a high of 1.1620 to 1.1432. The pound also finds itself under pressure as UK EU trade talks began. Half a trillion euros worth of annual trade are at stake with PM Johnson taking a hard line so far. Any further negative comments could have a negative impact on the Pound. 

EUR

  • The euro continues to strengthen away from the three year lows versus the dollar as markets unwind the carry trade buy back the single currency. While the euro is susceptible to market risks similar to the pound, currently markets are favouring the euro over the pound and as such we are seeing a favourable move there too.

USD

  • (Reuters) The U.S. dollar slipped to a six-week low against a basket of currencies on Monday, as investors bet on the U.S. Federal Reserve easing policy in a bid to counter the negative impact from the spread of the new coronavirus. The dollar index, which measures the greenback’s strength against a basket of six other major currencies, was 0.53% lower at 97.448. Earlier it slipped to a low of 97.176, its lowest since Jan. 16.
  • The panic in global markets prompted U.S. Federal Reserve Chairman Jerome Powell to issue a statement on Friday saying the Fed would “act as appropriate” to support the economy.
Amir Mehrad
Market update by Amir Mehrad
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