The British pound is substantially lower against the US dollar for a second day as the global market turmoil ratcheted up another gear, spooking global forex markets and sending traders into the safety of US dollars.
GBP/USD was down by 287 pips (-2.39%) to 1.1763 with a daily range of 1.1744 to 1.2129 as of 5pm GMT. The currency pair was at one point above 1.21 and now sits below 1.18 with weekly losses on course to match the massive drop seen last week at -4.19%.
British pound falls as coronavirus cases jump
The number of UK coronavirus cases shot up by 700 in the last twenty four hours, raising questions over whether the more cautious as perhaps less clear approach taken by the government might have resulted in a bigger spread.
It appears that Prime Minister Boris Johnson’s warning to avoid pubs and restaurants is being ignored by large numbers, with some reports suggesting customer numbers in London pubs are only down -20%. However, there seems to be a recognition that more needs to be done and London could be facing a lockdown in the coming days according to the Daily Telegraph.
Looking to the broader continent of Europe, there are now more coronavirus cases than in China, which is a milestone nobody had hoped to cross. In the Lombardy region of Italy the death toll has jumped by 319 in just 24 hours.
Dollar Index jump to 3 year high above 100
The US dollar is soaring against most major currencies with EURUSD, the most actively traded forex pair now down below 1.09. The dollar index (ticker DXY) has jumped to three year high and above the widely watched threshold of 100.
Stresses in funding and repo markets are exacerbating the anxiety across financial markets and sending investors flocking to the US dollar, even after the Federal Reserve eased monetary policy substantially. The weakness of other major currencies including the EUR, GBP and JPY due to the pressure on the respective economies are adding to the USD strength.
