The pound steadied yesterday following Prime Minister Boris Johnson’s hospital admission, before dipping sharply in late Asian trading once news broke that Mr. Johnson was to be moved to intensive care. For much of the day the indications were that the Prime Minister would be back at his desk shortly, but this now appears unlikely.
This trouble at the top compounds an already negative outlook for sterling, with concerns persisting that increased government spending to combat the current crisis will lead to a wider current account deficit. Additionally, consumer confidence yesterday recorded its lowest reading in more than 45 years, whilst the construction sector posted its most acute drop in activity in 10 years.
In early trading today, the pound is back up and remaining steady.
GBPUSD opened at 1.2302 and held firm across the day until late evening, dropping to 1.2195
GBPEUR opened at 1.1402 and performed similarly, dropping late evening to 1.1306
The US dollar is holding firm, with two prominent governors yesterday stating that the virus was showing signs of flattening out in their respective states. This reflects a broader outlook that the outbreak could be tapering, but this remains a tentative view.
Demand for the greenback has eased recently as the central bank indicated a willingness to spend as necessary in the current climate. With US stock futures trading lower today, it’s clear that investors remain concerned about the economic shock posed by the pandemic.
In the eurozone, nations including hard-hit Italy and Spain have begun to look ahead to easing lockdowns after consistent drops in fatality rates. However, finance ministers are expected to converge today and release three immediate options to support the economy during the crisis.
EURUSD opened at 1.0789 and closed with no change at 1.0791