Over the course of the last 24 hours of trading, the pound has been shaken from its recovery against is contemporaries, shedding over one per cent against the dollar, euro and yen. Once again, a slip in global confidence caused risk-taking investors to withdraw from the sterling and into safe havens; in comparison to the last confidence dip, however, this was linked to the complete collapse of global oil prices.
As mentioned in our webinar on COVID19’s impacts on the market, oil has long been seen as being linked to economic activity as it keeps trucks on the road, factories producing goods and planes in the air. Yesterday’s huge panic in the market came as future contract owners realised that global storage for oil is now around 97% full, meaning the oil they are due to buy has nowhere to go, causing some to look to sell their promised future purchases at a loss, driving the price negative for the first time in history.
If that wasn’t bad enough, the pound also had to face the music by way of a clutch of data release confirming economic performance in March – a frightening thought indeed. However, confounding many critics, at 06:00 GMT this morning, retail data figures showed that despite the hammering the sector has taken from the furloughing and laying off of staff, the cost hadn’t been passed onto the British consumer, with the key inflation statistic of retail pricing coming in at +0.2% over a -0.2% score. Keeping inflation under control will be vital for sterling’s chances in a post-coronavirus landscape, especially with the amount of quantitative easing from the Bank of England.
Understandably, your foreign exchange plans may have been put on hold or disrupted by the unique problem of coronavirus. However, as seen above, there will be many overlapping and previously unrelated impacts on sterling as we navigate our way out of the worst pandemic in a century. It is vital to stay in touch and formulate a plan of action with your account manager for when economies start to release themselves from lockdown and get moving again – there are plenty of ways we can assist you now to guard against huge potential rate swings in the future.
Have a great day,
Author: Joshua Haden-Jones, Senior Relationship Manager
Whilst every effort is made to ensure the information published here is accurate, you should confirm the latest exchange rates with WorldFirst prior to making a decision. The information published is general in nature only and does not consider your personal objectives, financial situation or particular needs. Full disclaimer available online.