Good morning,
At 20:30 GMT last night, UK Prime Minister Boris Johnson followed suit with the majority of mainland Europe, by enacting sweeping lockdown laws aimed at containing the spread of coronavirus. The closing of businesses all over the UK along with the Government restrictions on social gatherings means the Government’s word on supporting businesses and wages will be tested thoroughly. Although Johnson insisted these sweeping new measures will be reviewed every three weeks, make no mistake: these are the furthest reaching central government interventions since the second world war.
Whilst a lockdown had largely been expected by this point, the pressure placed already put upon sterling with regards to its spending programmes and creditworthiness meant another 1.20% was shed against the euro, and a further 1.10% versus the dollar by close of trading. The worst of the dollar moves began to halt around the 1.1450 handle, as the Fed announced unlimited quantitative easing, prompting investors to begin to slowly shift funds from the safe-haven dollar and into tangible assets such as gold, the go-to investment when the economy is failing.
Most in the market are solely looking at headlines, as we all are, for news on new cases and the hopeful flattening of the curve. The reality is, the market is moving on information at the same time as the majority of us – meaning continued big percentage swings are likely to continue.
Have a great day,
Author: Joshua Haden-Jones, Senior Relationship Manager
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