Since the end of 2019, the coronavirus has plagued the headlines. The global threat has played havoc with the global stock markets, workforces and the health of thousands across the world. The UK Prime Minister announced on Thursday that the UK has now decided to shift into the ‘delay’ phase of the coronavirus containment efforts. Therefore, investors are concerned how this decision may affect GBP as the UK attempts to negotiate trade deals, alongside a war against a pandemic-level disease.
GBP Likely to Shift Lower Against Euro as Virus Panic Continues
In currency terms, the virus panic may continue to hinder the pound sterling up ahead. This is particularly the case against the euro, which has benefitted recently from an influx of demand for the single currency as stock markets have seen a crash from the same coronavirus fears. As investors liquidate their stocks back into euros from previous ‘carry trades’ the demand for the currency increases, rising the value of the currency. The GBP stands to lose as the virus rages on with GBP investors worrying that foreign investment may dry up, an important pillar of sterling’s very foundation of strength. At the end of the Friday’s trading, the GBP/EUR interbank rate closed at 1.103 against with GBP losing 4.5% of its value over the course of the week. Investors across the globe will be keeping close watch on the coronavirus developments up ahead.
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