11/05/2020

Sterling steady following Johnsons lockdown speech


GBP

Sterling held steady overnight as Boris Johnson unveiled his new conditional plan to re-open society in the UK, but admitted it was far too soon to completely remove lockdown restrictions.

The governments latest proposals signal a very limited easing of covid-19 lockdown restrictions. These proposals include a new tiered covid-alert system which will govern how quickly the UK can leave the lockdown. With the UK placed very close to level 4 on the sliding scale, the guidance from the Prime Minister was that the UK workforce should continue to work from home as much as possible, with some flexibility aided to the Manufacturing and Construction sector.

Markets had hoped for a clear and concise plan from the government to kick-start the economy. However, last night’s address likely raises more questions than answers. For now, the governments approach is an extremely cautious one  which will likely see most of the economy re-open in August at the earliest.

Ahead of Johnson’s televised announcement on Sunday, Sterling had been under pressure following last weeks dovish Bank of England meeting which saw members keep policy unchanged. Two members dissented, voting for an increase to the Quantitative Easing programme whilst Bank of England Governor Andrew Bailey signalled that further Quantitative easing is likely in June.

May 13th – 12pm BST – Join our live webinar on ‘Managing Currency Exposure during Covid-19’ at https://zoom.us/j/98412333269

Key announcements

14:00 – GBP – Government guidelines following last nights address
15:30 – GBP – Boris Johnson set to appear before Parliament


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