Sterling lost a lot of ground over the last week against most major currencies- seeing lows of 1.14 against the U.S Dollar and 1.06 against the Euro.
The Bank of England cut rates to 0.10% and increased QE to record amounts, alongside the ECB announcing a 750bn support package, which has helped to stabilise both the Pound and Euro- but it seems right now, the U.S Dollar is still king- even though the Fed has cut rates to 0%- most investors are flocking to the Dollar as a safe haven.
It seems that cases are now slowing down in China, but increasing across Europe- it is now being said that the UK’s case/death rate will follow Italy’s due to the fact there has been no lockdown as of yet.
The market has so far been impressed by the Chancellor’s responses in this situation, helping businesses and employees across the UK- the next wave of announcements are expected to help the self-employed over the coming weeks. We have seen this reflected in the exchange rates as the Pound bounced back slightly on Friday.
Right now it is hard to tell where the markets will go, we will have to see how markets react on Monday to the Chancellors latest announcements, and if the UK Government is considering a lockdown- though guidance has been given for “social distancing”- much evidence is showing that people are not adhering to these measures which are going to end up spreading the virus more.
If you have an upcoming transaction and want to look at hedging options- please contact me and we can go over your requirements in more detail and work out which strategies will work best for you.
Stay safe out there.