Sterling fell to one week lows yesterday
Sterling fell to one week lows yesterday as leaked papers in the banking sector dented investors’ risk appetite, while rising COVID-19 cases leaves Britain considering a second national lockdown.
A slide in the banking industry put British blue chip companies on course for their worst day in over three months after reports that some London-listed banks were among those that moved allegedly illicit funds over the past two decades. Reports that Britain was pondering a second lockdown also further added to the risk-averse narrative and left Sterling struggling for support early this week.
Chris Whitty, the government’s Chief Medical Officer, and Patrick Vallance, its Chief Scientific Adviser, claimed that if left unrestricted the coronavirus pandemic in Britain would reach 50,000 new cases per day by mid October. With the prospect of a no deal scenario end to the Brexit transition period in December, Sterling was heavily sold off for safe-havens.
A resurgent dollar held on to sharp gains after virus fears and worries over delays in fresh US stimulus drove a wave of selling in just about every other asset market. Investors are worried that rising COVID-19 cases in Europe and lowered enthusiasm for fiscal stimulus in the United States could dent the global recovery from the pandemic.
With the death of Justice Ginsburg (member of The US Supreme Court), it is extremely unlikely any stimulus deal will be done until a new Justice is nominated, a process that can take months. This then shifts the focus of USD direction to the upcoming Presidential Election and global state of coronavirus cases.
- 8:30 – Bank of England governor Andrew Bailey speaks
- 14.30 – Federal Reserve chairman Jerome Powell testifies to congress
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