Market Analysis

The pound is up against the dollar and the euro

FOREX

The pound is up against both the dollar and the euro, following the Bank of England’s surprise announcement of a rate cut and support for bank lending. The unexpected decision is clearly targeting the anxiety generated by a sense of inevitability that the coronavirus crisis will trigger a recession. Sterling’s reaction was immediate, albeit not what normal circumstances would have dictated. The cut of 0.5% on interest rates instead offered support to the currency, as the markets see it as a positive for the economy which, combined with other forms of stimulus from the government, will give the country’s economy more of a fighting chance in the face of the greatest economic challenge since the financial crisis of 2008.

Ricardo Evangelista – Senior Analyst, ActivTrades