The pound dropped sharply on Friday, losing almost 1% against the US dollar and the euro after investors steered clear of any currencies deemed risky. Investors instead aimed for safe-haven currencies such as the Japanese yen, US dollar and Swiss franc. The Australian dollar is also linked heavily to risk sentiment and so fell 2% against its US rival.
Though there was no specific UK news on Friday, the UK’s finances are not viewed to be in a safe state and so investors fled as risk appetite fell. In addition to this, the negotiations with the EU are looking to be difficult and a large current account deficit means the country depends on overseas investment.
GBPUSD opened at 1.2861 and fell sharply across the day, closing at 1.2777 and reaching a low of 1.2739 shortly after
GBPEUR opened at 1.1698 and performed similarly. Reaching a low of 1.1577 shortly after closing
The Chinese yuan recovered on Friday as a weaker dollar and the expectations of a rate cut helped boost the Asian currency. The coronavirus still caused the yuan to finish February with its first monthly loss since August. If global stock markets continue to fall, then this will translate into further yuan weakness.
EURUSD opened at 1.0994 and fell to an afternoon low of 1.0961 before recovering to close at 1.1002
