GBP tumbles further
Sterling hit 5 month lows against the US dollar and the euro on Thursday, falling to its lowest level since October. The pound was affected by President Donald Trump’s decision to put restrictions on travel from Europe and European Central Bank stimulus measures fell short of expectations. The pound fell by more than two percent as investors looked to safe havens such as the dollar and other assets which has caused sterling to weaken.
The US decision to ban flights exempts the UK, but investors see this as a crisis which is escalating. This has caused investors to buy the greenback which causes the dollar to strength greatly as investors see the dollar a safe heaven and consequently this has weakened sterling greatly.
The euro weakened on Thursday after the European Central Bank announced more stimulus to fight the coronavirus impact but did not lower interest rates, with the single currency falling to the day’s low as investors rushed for dollars.
The ECB provided fresh stimulus to help the eurozone economy to deal with the spread of the cornavirus. Interest rates however states unchanged at zero percent, a move which may have disappointed financial markets.
The dollar gained on Thursday as investors looked to it as a safe haven due to the deepening panic about the cornavirus. The dollar was also up against the euro after the ECB decided not to cut interest rates.
The greenback held gains against most currencies after a blowout in swap spreads showed investors are facing a shortage of dollars, as equity markets plunged on fears about the economic impact of the cornavirus.
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