The pound has steadied off this morning, slipping slightly against the dollar but holding recent gains against the euro, ahead of an expected announcement about an extension of Britain’s lockdown imposed to curb the spread of coronavirus.
The British government is expected to announce that it will extend the lockdown in the UK for a further three weeks at its daily coronavirus news conference around 1700 London time, after an emergency response committee meeting at 1530.
Michael Hewson, chief market analyst at CMC markets said the lockdown extension is already priced into the pound. Sterling is more driven by the dollar’s strength and the euro’s potential to weaken than by domestic factors, he said.
In terms of where the pound could go in the short to medium-term, it could probably drift back to around $1.225 over the course of the next few sessions but ultimately I don’t expect it to weaken profoundly and if it does it’ll only be as a result of a big rise in the value of the dollar.
As the coronavirus pandemic continues, worldwide cases have reached 2 million and lockdown measures have halted growth around the world.
U.S. jobless claims data, due at 1.30 pm London time (1230 GMT), is expected to underscore the deepening economic slump but is already priced into currency markets we believe.