Daily Currency Update

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UK throws kitchen sink at coronavirus

GBP - British Pound

Yesterday, during the daily coronavirus update, the still relatively new Chancellor, Rishi Sunak, announced that the UK government would throw the kitchen sink at the coronavirus with other possible kitchen sinks to follow. The Chancellor increased the package pledged to businesses and households from £30bn to £330bn with more also available down the line should the UK require. This wholehearted approach however has done little to prop up the pound as it continued its slide towards 1.20. The support around 1.1960 now looks critical.

It was a bit of a better day though yesterday for European equities, which followed the US example and rose modestly. The FTSE 100 managed to end the day up 5.2%.

Key Movers

Across the channel though German ZEW investor confidence fell to its lowest level since 2008 and EUR/USD has now slipped to below 1.10, and as a result the USD is surging against the majority of its global peers. This is partly due to the funding squeeze we have seen since the start of the week which has driven up the value of the dollar. The Aussie is now trading at 16 year lows off the back of further dovish minutes from the Reserve Bank of Australia who suggested that they could cut rates again before their next meeting in April, whilst the Canadian dollar has also dropped to 4 year lows against its US counterpart.

In a ray of good news and to follow on from yesterday's commentary, it certainly appears that the number of cases in China and South Korea is peaking, two of the countries that were at the centre of the original outbreak.

Expected Ranges

GBP/USD: 1.1960 - 1.2120 ▼

GBP/EUR: 1.0930 - 1.1080 ▼

GBP/AUD: 2.0000 - 2.0300 ▲

GBP/CAD: 1.7100 - 1.7260 ▲

GBP/NZD: 2.0290 - 2.0540 ▲