GBP - British Pound
Starting the day around the 1.28 handle, GBP/USD fell to an intra-day low of 1.2763 as comments from Bank of England (BoE) governor Mark Carney, suggesting a possible interest rate cut could happen soon, weighed on Sterling.
Sterling then regained some ground against the USD, after the US Federal Reserve announced an out of cycle rate cut of 50 basis points to combat the risks to economic activity caused by the coronavirus. The FOMC pushed through the policy action ahead of its March 17-18 meeting to ensure maximum employment and price stability are maintained as fear and panic surrounding the pandemic continue to escalate.
In the hours that followed the announcement GBP/USD pulled back above 1.28 to a high of 1.2835 for the day.
The emergency move, the first since October 2008, raised expectations that central banks around the world could follow suit in a bid to provide markets with some confidence in the wake of the Coronavirus outbreak. Saying that, locations with very low or negative rates, such as the EU, Switzerland and Japan, will find it hard to make further cuts and may employ other stimulus measures instead, leading to downward pressure on their home currencies.
Early trading this morning, however, has seen the pound sold off following weaker than expected UK Services PMI data for February. The leading indicator of the economic situation in the UK Service sector posted a read of 53.2 vs 53.3 expected.
With no further top tier data from the UK for the rest of the week, investors will now turn attention to US jobs and income figures due tomorrow and Thursday.
As mentioned above, the main news of the day was the surprise move by the US Federal reserve to cut interest rates by half a percent. The US dollar plunged lower through trade on Tuesday, dropping against a basket of major currency counterparts, with the Euro, JPY and Swiss Franc being the main benefactors.
The AUD also regained some of its losses against the greenback after Australian Q4 GDP beat its consensus estimate with a print of 0.5% vs 0.4% expected.
In other news, the Caixin Market Services PMI from China posted its lowest number ever, halving from 51.8 January to 26.5 in February. Combined with the lowest Manufacturing PMI print earlier in the week this further highlights the expected affects of the Coronavirus on the Chinese economy.
Looking ahead to today, investors attentions will be on US Non-Manufacturing PMI from US plus US jobs and average income data due tomorrow and Friday.
1.2735 - 1.2835 ▼GBP/EUR:
1.1410 - 1.1510 ▼GBP/AUD:
1.9265 - 1.94 ▼GBP/NZD:
2.0235 - 2.0435 ▼GBP/CAD:
1.7025 - 1.7125 ▼