Global markets moved back to the safe havens of old through the Asian trading hours, after a small number of coronavirus cases broke out in China and South Korea. This, coupled with a steep increase in cases in Germany, caused traders moved to the USD for a precautionary measure. Following gradual global releases of countries from lockdown, the fear sweeping across markets would be for a second wave of infections which could require stricter quarantine measures. This could push already beaten economies to the brink.
Closer to home and off the back of the news, GBP weakened in line with expectations when there is a global downturn in risk appetite. Stock markets pulled back from their bullish trend and, in turn, GBP fell with it.
The government also released a dossier yesterday, going into more depth in regards to getting the economy back up and running to a normal level. The nine-step article went into more depth of UK Prime Minister Boris Johnson’s speech to the nation on late Sunday evening, informing the public what can and cannot be done over the coming weeks and months. This was better received by markets than the broadcast from Sunday with further clarity given to people.
Brexit talks have also moved on to the third round of negotiations this week, where the UK and Europe are virtually meeting to thrash out the future of the relationship between the two sides. Off the back of the last round of meetings, both sides were said to disappointed in the progress made. Traders will be closely watching the news releases to give certainty to how the divorce will take place come the end of the year. We have prepared a special Brexit report, which can be found here, as to why Brexit is still as important as ever and holding back GBP.
Have a good day,
Author: Jack Nicholls, Relationship Manager
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