The US dollar fell to two-week lows against its major rivals yesterday after concerns over the US economy’s resilience sapped USD demand.
While markets had anticipated some form of policy action the extent of the cut, and its unanimous nature, put a dampener on the pound.
As the accompanying meeting minutes suggested that another interest rate cut could be on the table in the months ahead GBP exchange rates slumped.
January’s monthly gross domestic product reading also offered markets cause for concern, with growth shown to have already stalled even before the impact of Covid-19.
Evidence of stronger UK wage growth may offer the pound some modest support, as the prospect of any uptick in consumer spending could limit economic weakness.
On the other hand, an uptick in the public sector net borrowing figure for February could put fresh pressure on GBP exchange rates.
Higher levels of government debt would expose the UK economy to additional risk in the face of growing global economic turmoil and the lingering uncertainty still surrounding the issue of Brexit.
With coronavirus firmly in the spotlight, the pound is likely to remain biased to the downside.
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)