Market Update

The pound inched slightly higher this morning as investors turned their attention to U.S. Federal Reserve and European Central Bank meetings this week at which officials are expected to provide further stimulus to their economies to fight the coronavirus.

Sterling has been very closely correlated with riskier assets such as stocks and when investors’ risk appetite increases, the pound tends to move up.

The pound was last up 0.4% at $1.2468, having risen earlier to an eight-day high of $1.2479. The British currency was also higher versus the euro, trading 0.1% at 87.02 pence after rising also to an eight-day high of 86.91 pence.

The Bank of Japan said on Monday it was expanding its stimulus to help companies hit by the coronavirus crisis, pledging to buy an unlimited amount of bonds. Traders now expect the Fed and the ECB to follow suit, on Wednesday and Thursday, respectively.

A further 360 people have died from COVID-19 in British hospitals, latest data showed yesterday, bringing the total to 21,092. It was the lowest daily death toll for four weeks.

Officials, including Prime Minister Boris Johnson, warn against lifting lockdown measures too early.

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