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GBP/USD plummets to $1.15, pairing sheds over 5% in coronavirus driven sell-off

currency-newsGBP/USD plummets to $1.15, pairing sheds over 5% in coronavirus driven sell-off
The pound nosedived on Wednesday as the recent Sterling sell-off picked up pace amid growing concerns about the potential economic impact of the coronavirus.

Sterling is putting on a mixed performance this morning, with GBP/EUR dipping to €1.0570 and GBP/USD slumping to $1.1491. GBP/CAD is muted at C$1.6775, while GBP/AUD and GBP/NZD have surged to AU$2.0340 and NZ$2.0565 respectively.

With no end in sight, the coronavirus crisis will continue to dictate market movement today, potentially catapulting the US dollar to new heights.

What’s been happening?

The pound entered freefall yesterday, with the GBP/USD exchange rate striking its lowest levels since 1985.
Sterling sentiment has been completely overwhelmed by coronavirus developments in recent days, with concerns over the UK government’s response to the outbreak undermining confidence in the pound.

Adding to the pressure on GBP exchange rates were comments from new Bank of England (BoE) Governor Andrew Bailey, who warned the UK is facing an economic emergency.

The collapse in GBP/USD was as much about USD strength as it was GBP weakness, however, as the US dollar roared higher as panicky investors flocked to the safety of the ‘greenback’.

Adding to the appeal of the US dollar was its status as the world’s reserve currency, resulting in massive demand for USD as individuals and business seek more liquidity during the crisis.

Meanwhile, the euro fluctuated yesterday as the EU took the unprecedented step to close its borders to foreign travellers, while the European Central Bank (ECB) announced a new €750bn quantitative easing programme.

What’s coming up?

We’re expecting another volatile day in currency markets as the coronavirus crisis continues.

With this in mind it's likely the US dollar will remain in considerable demand throughout the session as investors grow increasingly skittish.

The pound also remains vulnerable to a further sell-off.

Finally, in Europe investors will be looking for any signs that the EU’s quarantine efforts are beginning to show results.
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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