GBP rallies against USD
Sterling rallied further against the US dollar, rising to one month highs as the cornavirus fears along with a slump in oil prices rocked world markets. Money markets in Britain now see more of a chance of a rate cut later this month by the Bank of England to limit the damage caused by the cornavirus. They now price in a rate cut of nearly 50 basis points when the central bank meets on 26th March.
Expectations for more rate cuts would normally hurt the pound, but the scale of the dollar’s drop more than offset any selling pressure. The pound hit a more than one-month high against the dollar and was last up 0.7% and against the Euro. Sterling has been gaining at the expense of the dollar in recent days as investors fled to safe havens after the Fed’s decision for an emergency rate cut.
The pound’s recent gains have been underpinned by the Bank of England’s decision not to cut rates immediately. Investors do now see more of a chance the central bank will cut interest rates to combat slow growth and the cornavirus.
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