1-us-dollar-bank-note - USD

GBP/USD was up by 237 pips (+2.07%) to 1.1721 with a daily range of 1.1414 to 1.1931 as of 4pm GMT.

The currency pair staged a huge rebound over the last 24hours from 35-year lows at 1.14 to above 1.18, although it was off its highs by the end of the day. It’s another stinging weekly loss which currently sits at -4.15%.

Pound extends rebound off 35-year low

The second Bank of England emergency rate cut has helped stabilise forex markets and prevent what was shaping up to be one of the worst weeks on record for the British pound.

Bank of England cut UK interest rates to a record low of 0.1% and began a £200 billion quantitative easing (QE) program. The effect was to sure up market confidence, meaning the pound actually moved higher despite money-printing measures that increase the supply of pounds and so should, all else being equal devalue it.

The BOE actions in isolation might not have done the job but in concert with a big fiscal push from the UK Treasury and a coordinated effort from a multitude of global central banks from the Federal Reserve  to ECB to the Bank of Korea it has helped lift sentiment not just to the pound but across global markets.

Dollar drops as Fed backstops Municipal debt

The dollar was on course for one of its biggest drops as the Federal Reserve continued to backstop nearly every area of the market, adding a lot of dollar liquidity.

The shortage of dollars that had pushed up the price of a buck so much this week is gradually being reduced as the Federal Reserve opens up more swap lines with the other big central banks. There will now be a daily swap line operation with the Bank of England, Bank of Canada , Bank of Japan and Swiss National Bank.

On Friday the Federal Reserve expanded its money market facility to municipal debt. As a reminder, a municipal bond is issued by a state, municipality or county to finance its spending that is not covered by taxes.