Sterling fell against the US dollar and euro on Monday in volatile trading as money markets digested a further surprise cut to US rates to rock-bottom levels by the Federal Reserve in the face of the coronavirus pandemic. The Fed cut to a target rate of 0% on Sunday. At the same time, five other central banks, including the Bank of England, took action to provide extra dollar liquidity as part of coordinated global action.

The pound held at its lowest level since early October at $1.2215 and was last down 0.5% against the single currency. The euro is currently profiting (after the Fed cut) as it is seen as a safe haven over the pound according to some analysts. They also predict both the UK and eurozone economies are likely to see a negative quarter or two of growth at least. But the eurozone has a current account surplus; it doesn’t rely on foreign investment to the same extent as the UK.

The Bank of England may have to announce more stimulus measures after its next meeting on March 26, including potentially cutting rates further or restarting quantitative easing asset purchases. Money markets are already pricing in nearly a 30% probability of a quarter-point rate cut at the BoE’s next policy meeting.

GBPUSD opened at 1.2294 and fell slightly across the day, closing at a low of 1.2243

GBPEUR opened at 1.1031 and was steady for most of the day before jumping to an afternoon high of 1.1064 then quickly dropping down to a low of 1.0966

The safe-haven Japanese yen made sharp gains on Monday the spreading coronavirus outbreak meant investors avoided riskier assets, even after the US Federal Reserve slashed rates to zero and launched what is effectively a new round of quantitative easing.

The dollar index gained 0.24% against a basket of major currencies while the dollar dipped 1.60%.

The dollar has gained in the past week as companies drew on credit lines and bank lenders sought out the currency to fund the loans, which has placed increased demand on the greenback. To address this, the Fed and other major foreign central banks also cut pricing on their swap lines to make it easier to provide dollars to financial institutions around the world.

The euro gained 0.49% against the dollar in the morning.

EURUSD opened at 1.1182 and reached a high of 1.1234 in the morning before steadily dropping again to a low of 1.1106 in the late afternoon. The pair then closed slightly higher at 1.1165

Multiple global central banks acted to ease conditions on Monday. The Bank of Japan said at an emergency meeting it would buy more corporate bonds, commercial debt and establish a new corporate lending scheme. New Zealand’s central bank slashed rates in an emergency move while the Reserve Bank of Australia injected extra cash into the financial system.

The People’s Bank of China injected 100 billion yuan ($14.28 billion) into financial institutions, minutes before data showed China’s retail sales, industrial output and fixed-asset investment all tumbled in January and February.