Countries fight to contain Coronavirus
Monday 23 March, 2020
Daily Currency UpdateGBP - British PoundThe UK government is set to vote in emergency legislation today to give it powers to force people to stay inside in an effort to fight the Coronavirus outbreak. After millions of people took to the countryside this weekend for a walk in glorious sunny weather, there is a feeling that many people are not taking the concept of "social distancing" and keeping to advice of staying inside seriously. Emergency legislation is likely to bring in powers to force people showing Coronavirus symptoms to stay indoors and also possibly tell non-essential retailers to close their doors.Last weeks swings in GBP/USD were the biggest since the Brexit referendum. The pound started the week trading around the 1.24 handle however dipped down to as low as 1.14 at one point as fears over the spread of the disease in the UK werent being taken seriously enough with pictures of packed trains in London spooking investors. The language from UK PM, Boris Johnson has become more and more blunt as the week has gone on and it seems some sort of imposed isolation for Londoners and other badly affected areas will be implemented before possibly the whole country being asked to stay at home. Non-vital medical treatments have been cancelled and a deal between the NHS and the private health sector has released thousands more beds to be used to help those catching the virus. Many thousands of ex-NHS workers are returning to work and 1.5m vulnerable people over 70 will be asked to stay indoors for four weeks from this week. Currently GBP/USD trades at 1.1620 with GBP/EUR at 1.0850.
Key MoversThe situation on continental Europe continues to worsen with Italy now having more confirmed deaths from Covid-19 than China, the source of the outbreak. The death toll has now topped 5400 in Italy with the northern province of Lombardy bearing the worst of the brunt. Spain is Europe's second worst affected country where there are over 1700 deaths and a state of emergency has been extended for another 15 days. In Germany, Chancellor Angela Merkel has announced she will be going into quarantine for 14 days after coming in to contact with an official confirmed to have caught the virus. Strict controls of movement have been introduced in Germany as well as Greece.In America, California has introduced a lockdown for all residents unless they are going to work or buying food. New York state alone now has 15k confirmed cases, around 5% of the global total with New York Governor Andrew Cuomo giving a stark warning that 40-80% of residents could catch the virus. In total America now has over 30k cases with at least 359 dying.Organisers of the 2020 Tokyo Olympics have advised they will make a decision on whether the games will go ahead in four weeks time with it looking more and more likely it will be called off until next year. Stock markets around Europe are all down, however not quite hemorrhaging as badly as last week. After starting the Asian session on the back foot the dollar is again on a tear with USD/JPY up to 110.5 and EUR/USD back under 1.07. AUD/USD is back under .58 and NZD/USD heading towards .56. Until markets are convinced that the world is taking serious action and we see at least a slowdown in the infection rate then risk assets will be on the back foot.
- GBP/USD: 1.15 - 1.1720 ▼
- GBP/EUR: 1.0740 - 1.0945 ▼
- GBP/AUD: 2.0020 - 2.0320 ▲
- GBP/NZD: 2.0460 - 2.0750 ▲
- GBP/CAD: 1.6650 - 1.6810 ▼