The Pound Remains Under Pressure as Investors Enter a ‘Wait and See’ Phase

Pound to Dollar Rate Falls Sharply

GBP failed to push through it’s recent trading high last week of just over 1.24 versus the USD as markets seemed to pause to assess the impact of Covid-19 on the global economy. Volatility in the currency markets appears to have decreased while investors now enter a ‘wait and see’ phase.

For the UK politics again take the forefront in the news stakes with Labour announcing Sir Keir Starmer as their new leader. His confirmation that he would look to work together with the current government over the coronavirus pandemic would have been welcome news as Prime Minister Boris Johnson was admitted to hospital over his ongoing symptoms with Coronavirus. The PMs hospital admittance put a little pressure on Sterling and the Pound to USD rate has slipped to 1.2290 at the time of writing.

Staying Home All a Bit Too Much for Some

Meanwhile the British public were once again warned that a failure to comply with government guidance on social distancing could lead to a more dramatic lockdown as seen throughout Italy and Spain as the good weather took people out in their thousands with many reports of large gatherings.

With almost 5,000 deaths now confirmed from the virus the UK economy is beginning to feel the squeeze as news reports of staff being furloughed on a significant scale across the country to help businesses defend themselves from the impact of the Pandemic. The UK service sector, accounting for 80% of UK GDP also posted a very disappointing figure of 34.5, a record slump, and showing significant contraction in the sector.

The US Reopen for Business?

Unfortunately for Donald Trump his recent assertions that the US would be reopen for business from mid-April looks less and less likely as over 9,000 deaths are confirmed in the States from coronavirus.

Unemployment is continuing to rise at an alarming pace with payroll numbers dropping by 701,000 up to mid-March, the first time in a decade that these numbers have shown a decline. The recently announced $2 trillion dollar aid package could possibly be just a drop in the ocean if these indicators continue to post such a negative outlook.

The US Dollar remains stable despite the disappointing data as it’s safe haven status continues to see a demand for the greenback.

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