At yesterday’s daily Government update on coronavirus, UK Prime Minister Boris Johnson enthusiastically proclaimed that the UK was now “past the peak and on the downward slope”. Furthermore, he also said he would set out a “menu of options” that the Government is currently mulling over with regards to lifting lockdown, with the roadmap of how the restrictions would be lifted set out at the next lockdown review on Thursday 7th May.
In response to the news, the pound took an end of week step up against most currencies, as those in the market placed their bet on the UK and sterling to be the next major economy to leave lockdown and reopen businesses. As mentioned my article “Johnson on a tightrope”, the Government is now in a very precarious position; keep pace with the rest of the world by easing restrictions to rescue the economy and risk a second spike, or hold on longer and do longer-term damage to the economy and the currency. Yesterday’s press conference looks to the market like a middle way between these two choices, with further restrictions likely to continue, but, by allowing insight into a timeline, at least businesses and the markets will have some clarity and time to plan going forwards.
News that pharmaceutical giant AstraZeneca had teamed up with Oxford University – who have recently been trialling coronavirus vaccines on humans – to produce a possible inoculation ready for use by the end of the year in the UK gave fresh hope to the longer-term prospects of eliminating a chance of a second or third wave of infections. If the UK can capitalise on this before the end of the year, longer-term sterling buyers could start returning to the market, offering stability for the currency on the basis of Britain’s economy being not only safe now, but safe in future from possible outbreaks.
Have a great weekend,
Author: Joshua Haden-Jones, Senior Relationship Manager
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