Since the end of 2019, the coronavirus has had the world in its tight grip as it continues to spread throughout the globe, with every continent feeling the effects of the global fallout from COVID-19. The virus originally broke out in Wuhan, China, but has since spread further west now reaching the United States. Countries around the world have gone into ‘lockdown’ to prevent the spread of the deadly disease with Italy, Spain, Norway and Belgium to name a few of the countries currently under strict pressures to remain indoors under isolation and quarantine measures. The World Health Organisation noted that Italy has become the new epicentre for the disease following a decrease in cases in China, which has mounted pressure on the euro as more nations within the 19 nation Eurozone are forced into lockdown, significantly affecting their economic outputs. Meanwhile, the coronavirus impact has boosted the UK’s response to controlling the virus and maintaining the British economy in volatile times, which could be set to continue as the pressure is ramped up from the deadly COVID-19 virus.
Economic Impact From Virus Set to Be Huge for Eurozone
The question on most investors minds at the moment is “how will the coronavirus impact X currency?”. This is the million-dollar question that unfortunately no-one can predict with 100% confidence. But the markets have noted that with the global disruption caused by the coronavirus, that economic outputs are set to be severely dampened. The Eurozone is set to suffer from the early breakout of the virus in Italy which has now been named as the epicentre of the coronavirus following China’s recent reports of a downturn in new cases. Following in Italy’s footsteps other European nations like Belgium and Denmark have also gone into lockdown which will impact the Eurozone’s GDP figure as well as individual figures up ahead like manufacturing PMIs for example.
UK Also Set to Suffer From Virus Interruptions
The story is set to be much of the same for the UK, with the country preparing to enter a lockdown phase itself after the closure of all UK schools on Friday. The UK has suffered from 144 deaths at the time of writing with over 3200 cases being reported across England, Scotland, Wales and Northern Ireland. Many workers have seen disruption to their working schedules as many workplaces have been forced into closure amid the virus outbreak in an effort to reduce the risk of infection.
Action May Be the Way Forward for GBP and EUR
With markets highlighting that economic figures are set to slump across the board in the upcoming months and probably for the first half of 2020, the more impactful move for nations to make now will be the actions taken in order to prevent the spread of the disease and to limit the damage to their economies. The UK’s recent moves towards the end of the week, like providing further stimulus to support the nation and its workforce may be a positive step in the right direction which could take GBP further than EUR in the weeks ahead. The Eurozone recently announced its mega-stimulus package but the plan has soured with investors as they noted that the size of the package is almost certain to take the eurozone into a recession up ahead.
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