gbp-british-pound-coin - GBP

The British pound is higher against the US dollar on Thursday in a small rebound from the 35-year lows reached the day prior. Both the Bank of England and the Federal Reserve have added new policy accommodation with UK interest rates now at a record low.

GBP/USD was up by 46 pips (+0.43) to 1.1663 with a daily range of 1.1475 to 1.1792 as of 4pm GMT. The currency pair had come just short of 1.15 on Wednesday and rallied some 300 pips off the lows before pulling back just short of 1.18. Weekly losses are still a whopping -5.00%.

Pound off 3-decade lows after UK interest rates slashed to 0.1%

The Bank of England has initiated another emergency rate cut, taking rates down to a new record low of 0.1%. It was only last week that interest rates were lowered in an emergency rate cut by 50 basis points to 0.25%. One decimal point is the only thing that keeps the UK out of the list of nations with a zero percent interest rate policy (ZIRP).

They were not scheduled to meet and or decide any new policy until next Wednesday but have taken emergency action.

The central bank will create £200 billion in new money and use it to buy government bonds. That means the money is added into the financial system to protect it from the coronavirus pandemic which threatens to bring the economy to a standstill.

Dollar falls after Fed imitates new lending facility

The Federal Reserve introduced new measures overnight in concert with a surprise move from the European Central Bank (ECB) as well as other central banks including the Bank of Japan (BOJ) and Bank of Korea and the Reserve Bank of Australia (RBA).

The Fed new facility designed to support mutual funds from large investor redemptions. It is called the Money Market Mutual Fund Liquidity Facility (MMLF) which according to the Fed will be used to “Make loans available to eligible financial institutions secured by high-quality assets purchased by the financial institution from money market mutual funds.”