12.03.2020 EURO POUND Daily Analysis

The Euro has appreciated in value since stock markets started selling off in earnest in late February after it dawned on investors the virus would have a significant impact on the global economy. The response by the EU to the crisis is unconvincing, particularly when contrasted to the UK which has the benefit of both a majority government and independent central bank to provide support to the economy. We saw on Wednesday a response from the Bank of England to the crisis with a 50 basis point interest rate cut and fresh lending for businesses being announced. The government recently unveiled a £30BN aid package for the virus-impacted economy. However, the Pound-to-Euro exchange rate has declined in value since late February when a sharp sell-off in global stock markets saw billions of euros worth of investments return home to the Eurozone. Further support for the Euro came as thousands of contracts betting against the Euro began to unwind, with traders having to close out bets which boosted demand for the single currency further.