This morning the Bank of England has announced an emergency cut in interest rates to shore up the economy in the wake of the coronavirus outbreak. The MPC (Monetary Policy Committee) has cut the base interest rate from 0.75% to 0.25%, taking borrowing costs back down to the lowest level in UK history. In addition to the cut, the BOE has also said it would free up billions of pounds of extra lending power to help the banks supports firms.
Initially the Pound dipped into the mid 1.13’s against the Euro and 1.2880 against the USD, however, the Pound has recovered since the breaking news and levels are back over the 1.14’s and 1.29’s respectively.
“The Bank’s three policy committees are today announcing a comprehensive and timely package of measures to help UK businesses and households bridge across the economic disruption that is likely to be associated with Covid-19. These measures will help to keep firms in business and people in jobs and help prevent a temporary disruption from causing longer-lasting economic harm,” read a statement from the Bank.
Budget this afternoon
Around 12:30 UK time the Chancellor of the Exchequer Rishi Sunak will unveil the government’s 2020 Budget, with expectations high that an increase in government spending will be announced. This should strengthen the Pound as a substantial increase in spending should help boost economic activity.
The budget will address a variety of issues therefore the foreign exchange market will be attempting to make sense of this, we could see some volatility around the event.
If you or your company buy and sell in a foreign currency it could be worth getting in touch with Optimal currency. We can help you make sense of the current market conditions and offer market tools to protect from further adverse market movements.
Get in touch today to find out how we can help.