At 19:00 GMT last night, UK Prime Minister Boris Johnson delivered the news that most knew was coming: Britain will be staying in lockdown for the foreseeable future and release from the measures will be conditional. Admittedly, whilst the measures are framed to show a gradual path towards the lifting of restrictions, the confirmation of July at the earliest for some of the critical services industry to re-open sent shudders through sterling markets, as the writing is seemingly on the wall for chances of a swift exist and instant recovery.
As mentioned in my previous article “Exit strategy”, there is now a global race to see which economies are exiting lockdown measures first, with monetary flows heading there, bolstering the local currencies. The Australian and New Zealand dollar have both been beneficiaries of these flows, as restrictive measures have gradually been lifted, offering an economic path to recovery. Sadly for sterling, the recovery is now looking like it will be a ‘u-shaped’ return to prosperity, a longer and more drawn-out process that will see Britain fall to the back of investment queues as it reacts to headlines.
At least for those of us who look for signs of what is to come in sterling, the Government’s new 1-5 Coronavirus Alert slider will prove a handy addition to the toolkit since, as the arrow moves up and down the scale, presumably so will the pound.
Have a good day.
Author: Joshua Haden-Jones, Senior Relationship Manager
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