[vc_row][vc_column][vc_column_text]As the Bank of England (BoE) announced a fresh emergency interest rate cut this helped to lift the pound from its multi-year lows.

The European Central Bank (ECB) also acted to shore up economic activity, reducing the downside potential of the euro as policymakers indicated that there is ‘no limit’ to their commitment.

With market anxiety over the ultimate impact of the Covid-19 crisis still elevated the US dollar remained on a solid footing against its rivals, in spite of worries over the US outlook.

Heightened market risk aversion and a Reserve Bank of Australia (RBA) interest rate cut served to push the Australian dollar to fresh lows against its rivals, meanwhile.

Emergency BoE action lifts pound from multi-year lows

Market apathy over the extent of UK government action to combat the impact of Covid-19 saw the pound fall to an eleven-year low against the euro and a thirty-five year low against the US dollar.

Even as the government pledged greater support for businesses and other measures aiming to insulate the economy from the current crisis the mood towards the pound soured.

This prompted the BoE to deliver its second emergency policy move in as many weeks, cutting interest rates to a fresh record low of 0.1%.

The move helped to put a floor under GBP exchange rates, lifting them away from their multi-year lows as fears of an imminent UK recession temporarily eased.

However, the release of March’s initial manufacturing and services PMIs could see the pound trending lower across the board once again.

With forecasts pointing towards the services PMI slipping below the neutral baseline of 50, indicating a contraction in sector activity, confidence in the economic outlook may diminish.

On the other hand, after its emergency action the BoE’s scheduled policy meeting may provoke limited movement for GBP exchange rates on Thursday.[/vc_column_text][/vc_column][/vc_row]

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* Information courtesy of Currencies Direct, Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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