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Market Update

Sterling has dipped against the U.S. Dollar and Euro, as an unexpected rate cut from the U.S. Federal Reserve fuelled expectations the Bank of England could follow suit to protect the economy from the fallout of the coronavirus outbreak.

Some analysts are expecting we could see an emergency cut for the BoE this week.

The Fed’s emergency moves on Tuesday to shield the world’s largest economy from the impact of the virus failed to comfort markets overnight, and the dollar regained ground against a basket of currencies.

Money markets have moved swiftly to fully price in a BoE rate cut of 25 basis points (bps) at its next meeting on March 26, up from a probability of 80% prior to the Fed move.

Bailey, who will take the helm later this month, is scheduled to speak to lawmakers in parliament later in the day.

The February services Purchasing Mangers’ Index, an indicator of business activity, was released this morning. It came in at 53.2 matching the forecast, however 0.1% lower than January’s reading.

Britain set out its battle plan to tackle the spread of the virus, warning that as many as a fifth of employees could be off work at the peak of the outbreak.

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