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Pound climbs as new quarantine measures come into effect

currency-newsPound climbs as new quarantine measures come into effect
The pound surged yesterday, finding support as the UK began imposing stricter lockdown measures.
Trade in the pound is mixed this morning however, with GBP/EUR buoyed at €1.0936 and GBP/USD climbing to $1.1830. GBP/CAD is muted at C$1.6998, while GBP/AUD and GBP/NZD have retreated to AU$1.9603 and NZ$2.0157 respectively.

Looking ahead, we expect currency markets to remain in flux today as the coronavirus crisis dominates markets.

What’s been happening?

The pound roared higher on Tuesday, recapturing some of its recent losses as markets appeared to welcome the start of the UK’s coronavirus lockdown.

It’s hoped the new stricter quarantine measures will help the UK curb the outbreak.

The rebound in Sterling also comes in spite of some gloomy preliminary PMI figures from the UK showing a sharp contraction in private sector growth this month. 

Meanwhile, the US dollar continued to ease away from its recent highs as concerns over liquidity faded thanks to a coordinated effort by central banks.

Further limiting the appeal of the ‘greenback’ was a warning from the World Health Organisation (WHO) that the US is at risk of becoming the next epicentre of the coronavirus outbreak as the country experiences a ‘very large acceleration’ cases.

This slump in the US dollar helped to prop-up the euro during yesterday’s trading session in spite of the Eurozone’s PMI figures making for some grim reading, as the coronavirus crisis saw business activity in the bloc crumble to a new record low.

What’s coming up?

It’s safe to assume that the ongoing coronavirus crisis will continue to dictate movement in currency markets today.

Investors will be keeping a particularly close eye on Italy, where the number of new cases appears to have started slowing in recent days.

Should this trend continue its likely we will see the euro extend its gains today.

This may also see the US dollar remain under pressure as market sentiment continues to improve thanks to the approval of a massive US stimulus package.

Meanwhile, a robust inflation reading from the UK looks to support the pound in early trade today.
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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