Yesterday saw the pound push up to the top of its range at 1.1420 against the euro and 1.2400 versus the dollar, as sterling continues to benefit from more risk in the market.
As I mentioned in Tuesday’s update, some in the market are beginning to see the pound as a good bet to make a profit, as speculators start to drift away from the safety of the US dollar and shift funds back into stocks and riskier assets as confidence returns. Understandably, it is odd to view the UK and pound by extension as something that is risky to invest in; however, with so much still up in the air with regards to the future trading relationship with the EU, many in the market prefer the safety in numbers of the EU, or the largest economy in the world, the USA, to keep their funds in when a crisis hits – as demonstrated by the sterling’s huge slide in mid-March.
Luckily for the pound, the EU continues to squabble over the issue of a ‘coronabond’ with the Netherlands, in particular, voicing their disagreement over the pooled debt directive, which is holding back a shared money distributing stimulus as seen in the US and UK. On top of this, reports that Boris Johnson is sitting up in bed and on the mend soothed some jitters in pound markets that worried over, on one hand, the direction of the UK’s response in his absence, and possibly the nasty machinations of Westminster politics in the other.
For now, the pound remains, still, very much within its trading ranges on the euro and dollar, between 1.1250 and 1.1400 and 1.22-1.2450 respectively. Both of which are starting to calm down as western markets approach the long Easter weekend, offering the pound; and us all, some time for reflection on what’s been so far – and perhaps what’s still to come during the coronavirus pandemic.
Have a fantastic Easter,
Author: Joshua Haden-Jones, Senior Relationship Manager
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