- Posted by currencies in Bank of England, Bremain, Brexit, Currency, Dollar, Economy, election, GBP, Inflation, No Deal, Prime Minister, Sterling, UK, Uncategorised
- March 10, 2020
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Oil prices fell by around 30% over the weekend, due to the ongoing disagreement between Russia and Saudi Arabia over the production of oil as lower prices have begun to affect orders.
The talks ended with Saudi Arabia threatening to lower their prices by $6 to wipe out their competitors during tough times that the coronavirus has brought upon them.
This, partnered with growing fears of what effect the virus will have on the economy led the Dow Jones to fall by 7% at open which led to there being a 15-minute halt on the market to prevent any further losses. As a result of this traders sold their dollars back into other currencies leading to the EUR-USD rate going to its highest level in over a year at just below 1.15 and GBP-USD shooting up to just below 1.32 meaning it hit a 5 week high.
Despite solid gains against the dollar, pound sterling fell to its lowest level in over 5 months against the Euro. However, with continuing fears of what the virus may do to the global economy, we may see the rates fall even lower.
UK health authorities have stated that the worst-case scenario is that we could see the virus infect around 60% of the UK, whilst a research institution in the US has predicted that 10% of the US population will catch the virus.
Traders are now waiting for the UK budget to come out on Wednesday as the BBC have reported an increase of £5 billion into British exports after the first pre-Brexit budget. This would mean despite the UK leaving the EU, trade between the two are still strong and could be a good selling point for Johnson in the next round of negotiations with the EU. However, despite there being potential positive data being released for the pound. It is still likely to be weighed down by the impacts of Covid-19.