Well, what a week it was for Sterling; We saw GBPEUR drop to 1.16 (From 1.20) and GBPUSD drop to 1.27 (From 1.30).

There have been several reasons for the drop over the last week; the main ones being the coronavirus outbreak, stock markets bleeding, loss of confidence in commodities as a safe haven, global economic outlook downgrades and central banks all looking to cut interest rates this year.

As Coronavirus spreads throughout the globe, most investors are pulling out of positions in stocks, and the currencies that underwrite them- which is also causing major currencies to weaken.

Central banks have now responded by saying that rate cuts may be on the cards, with 3 expected in the U.S this year, one in the UK and one in Europe. The reality of this is, I am not even sure how an interest rate cut helps battle the problems these economies have, and how it is an acceptable response to the virus outbreak, but it seems the Central banks have their minds made up.

Expectations for GBPEUR & GBPUSD have now also been downgraded- with a break below 1.1614 on the EUR now meaning a low of 1.14 could be expected, and 1.25 on GBPUSD.

Unfortunately, Coronavirus will be the main issue for global markets ahead, which will make predicting the exchange rates impossible- with more cases around the world, each respective country’s currency will weaken.

My guidance will be to start looking into locking in some of your exposure, as I believe this will go on for a little while- if you would like to speak with me about a strategy for your upcoming requirements please don’t hesitate to contact me directly.