13.03.2020 EUR/GBP Daily Analysis

13.03.2020 EUR/GBP Daily Analysis

Chancellor of the Exchequer Rishi Sunak announced that £30bn in immediate spending will be made available to counter the economic slowdown prompted by the coronavirus outbreak, with an additional £175bn increase in spending due over the next 5 years. The fiscal boost contained in Budget 2002 has been interpreted by foreign exchange markets as being largely supportive of Sterling as it should provide a cushion for the economy as it faces the dual challenges of the coronavirus outbreak and the shift in trade relations between the EU and UK. Sterling has endured a relatively volatile days’ trade as markets digest the impact of the Bank of England interest rate cut as well as the new fiscal announcements. Markets appear to have arrived at the conclusion that the coordinated approach of both the Bank of England and the Treasury is likely to be credible and effective, certainly when compared to other countries that do not have a government with a stable majority or an independent central bank. The Pound-to-Euro exchange rate is quoted at 1.1423, up from a low of 1.1316. The Pound-to-Dollar exchange rate is quoted at 1.2948. Markets had been looking for a sizeable and convincing response to the coronavirus epidemic, which is expected to reach its peak in the UK at some point in the next two weeks.