If you are having difficulty locating the information you require, we're here to help. Just get in touch and we will do our best to assist you.

GBP/USD plummets to $1.28 as London faces tier two coronavirus restrictions

currency-newsGBP/USD plummets to $1.28 as London faces tier two coronavirus restrictions
The pound moved broadly lower yesterday as the announcement stricter coronavirus restrictions across many parts of England offset some cautious Brexit optimism.

Sterling appears to have stabilised this morning, however, with GBP/EUR flat at €1.1029 and GBP/USD muted at $1.2905. GBP/CAD is rangebound at C$1.7068, while GBP/AUD and GBP/NZD hold steady at AU$1.8219 and NZ$1.9556, respectively.

Looking ahead, the focus today will remain on the EU summit as leaders continue to debate Brexit and Europe’s coronavirus response as it enters its second day.

What’s been happening?

The pound retreated yesterday, after it was announced that London and several other areas will face stricter coronavirus restrictions from this weekend, placing more than half of England’s population in the top two tiers of restrictions.

However, helping to limit Sterling’s losses through the European session was some cautious optimism regarding Brexit as Boris Johnson’s spokesperson stated that the UK still wants to reach a trade deal with the EU.

The euro also came under some pressure on Thursday as EUR investors were spooked by the announcement of new coronavirus restrictions in France and Germany.

As Europe experiences an increasingly deadly second wave of coronavirus infections, countries are scrambling to introduce stricter measures to contain its spread, with concerns over how these will impact the Eurozone’s fragile economic recovery weighing on the euro.

The tightening of coronavirus restrictions in Europe drove a sizeable sell-off in equity markets yesterday, this in turn saw investors flock to the safe-haven US dollar.

USD demand was further supported by the latest US jobless claims as an unexpected spike in claims last week stoked concerns over the US labour market and cemented Thursday’s risk-off tone.

What’s coming up?

Turning to today’s session, it’s likely we will see the EU summit continue to dominate the agenda as it enters its second day.

Boris Johnson has said he will wait until the summit is over before deciding the ‘next steps’ today, with the pound poised to rally if the PM opts to continue trade talks with the EU.

At the same time, EUR investors will be looking to EU leaders to provide a comprehensive plan on how to better coordinate their coronavirus response.

Closing out the session, we have the publication of the latest US retail sales figures. September’s release may see the US dollar relinquish some of its recent gains if the trend of slowing sales growth extends into another month. 
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)

Check our exchange rate

Thanks, we'll be in touch.

Check your inbox - one of our currency experts will be in touch to complete your quote.

If you want see our online exchange rates straight away, simply register online & log in.