In yesterday’s London trading session, Sterling finally caught the break it was looking for against the Euro and Dollar, as incoming Bank of England Governor Andrew Bailey sought to reassure markets by declaring “What we need is frankly more evidence than we have at the moment” with regards to the impact of Coronavirus on Britain’s trade flows.
As a result, expectations of a rate cut at the March 26th meeting were rowed back to 50%, down from a lofty 68% at the start of the week. Just as last time, the pound will be hyper-sensitive to the markets estimations on whether a cut is looming – the percentage estimation is usually built upon data releases pre-meeting but, this time, the impacts of Coronavirus have built-in extra scepticism. The fact the chances stood as high as 68% without any meaningful data releases shows the extent of Coronavirus’ impact on sentiment; which has been replicated on a global scale, with The Bank of Canada dropping rates by double the amount they were expected to yesterday, sending the Canadian Dollar south against most majors instantly.
Outgoing BoE Governor Mark Carne is due to speak today at 17:00 GMT; although Carney is on the way out, remarks with regards to the continuing impacts of Coronavirus on the markets will be taken heed of. In the worst-case scenario for Sterling, much like as seen in the USA this week, an emergency out of session rate cut could come at any time – expect prolonged Pound jitters in the interim, as markets struggle for direction and stability.
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.