Sterling Loses Ground
The pound has taken a substantial knock over the last 24 hours as fears over the global economic outlook have weighed heavily on the UK currency. Sterling has fallen over 1% against both the euro and the US dollar after the chair of the US Federal Reserve, Jerome Powell, highlighted his concerns over the impact of the coronavirus during a speech delivered on Wednesday afternoon. As a result, global stock markets have fallen significantly as investors realise the recent rallies have perhaps been a little premature. The FTSE closed around 2% lower and Wednesday and lost another 4% on Thursday, closing just above the 6000 mark.
Fears over a second wave of the coronavirus have also weighed heavily on global markets and the UK currency. Statistics from Texas and California pointed to a resurgence in the number of infections, with Texas posting their highest daily infection rate since the beginning of the pandemic and California posting its highest daily infection numbers in over a month. Latin America is also becoming of increasing concern, with infection rates in Brazil and Mexico on the rise; both heavily populated countries. Brazil has now suffered the third highest number of deaths globally, behind only the US and the UK. With poor healthcare infrastructure and densely populated urban favelas there is growing concern that the virus will spread through the country like wildfire. Although the pandemic seems to be coming under control in Western Europe, it is now ravaging other parts of the world.
At the time of writing, GBP/EUR is trading at 1.11 and GBP/USD is sitting in the low 1.26’s.