Sterling fell on Tuesday, dropping most of its gains from the previous session, thanks to a stronger dollar that made gains on expectations that the US government will release a fiscal stimulus package to limit the economic damage caused by the coronavirus. Sterling extended losses and was down 1.5% against the greenback at $1.2930 on Tuesday, after hitting a more than month-high of $1.32 the previous day.
The pound edged up against the euro, up 0.29%, but remained close to four-and-a-half month lows as concerns about ongoing fractious Brexit trade talks continue to weigh on the currency.
This morning, the pound fell against the euro but stayed steady against the dollar after the Bank of England lowered interest rates by 50 basis points to 0.25%, in its first emergency cut since the global financial crisis more than a decade ago. The move, which came in response to growing worries about the coronavirus and hours before a new UK government budget plan, pushed the pound down 0.5% but up 0.1% against the dollar.
GBPUSD opened at 1.3065 and fell sharply across the afternoon to close at 1.2924 but later reached a low of 1.2876
GBPEUR opened at 1.1482 and fell across the day to hit a low of 1.1405 shortly before closing
The dollar posted strong gains on Tuesday against the Japanese yen and Swiss franc, rebounding from the previous day’s massive losses, as investors hoped global monetary policymakers would unveil further stimulus plans to reduce the economic impact of the coronavirus.
Some analysts said it was too early to predict resistance levels for the dollar, which fell on Monday after an energy price war between Saudi Arabia and Russia triggered the biggest daily drop in oil prices since the 1991 Gulf War, and Treasury yields followed.
Against a basket of currencies, the dollar rose 0.5%. It rose 2.7% against the yen. The yen also fell against the euro and the Australian dollar, after Bank of Japan officials signaled, they were ready to introduce further stimulus before a policy meeting next week.
The euro dropped 1.4% versus the dollar while the dollar rose 1.5% against the Swiss franc, recovering after three days of heavy selling caused it to hit an almost five-year low. Data suggest the Swiss National Bank is now intervening to weaken its currency.
EURUSD opened at 1.1389 and was steady until the late afternoon where it fell sharply to close at a low of 1.1315