The US Dollar reached an incredible 35-year high vs the Pound. Many companies are looking to safeguard during the pandemic by hoarding USD and this provides individuals with the best opportunity since the 1980s to exchange them for GBP. Despite this, the Bank of England’s second emergency cut to interest rates caused the Pound to strengthen slightly, and as the markets began to stabilise, the Dollar weakened. As noted above, the markets are extremely volatile at the moment and it’s difficult to predict where this currency pair will move next.
Despite GBP’s well documented drop against the USD and the EUR, it managed to reach a near four-year high against the Australian Dollar. Due to Australia’s close connection with China and the unexpected outbreak of COVID-19, the GBP/AUD position reached its highest level since the EU referendum. If you were planning on moving some GBP into AUD this year, now could well be the time to consider arranging an exchange or discuss putting a strategy in place.
Following the Bank of England’s decision to make a second emergency cut to interest rates, the Pound has strengthened against safe-haven currencies such as the US Dollar and Swiss Franc. The Swiss National Bank made the decision to keep interest rates on hold recently, stressing that monetary policy alone could not fight the economic downturn presented by the Coronavirus pandemic.
The Euro strengthened to a six-month high against the Pound as Sterling struggled with Coronavirus worries. Because the UK has a larger trade deficit than, for example, the Eurozone, the mechanics are such that the Pound will tend to fall by more than other currencies, such as the Euro or Swiss Franc, in times of crisis. The Euro has benefited from Coronavirus related developments due to its status as a ‘funding’ currency, causing it to strengthen at times of market stress. However, as we’ve seen, this does not mean that the single currency is immune to volatility. It has suffered against the Dollar and remains sensitive to talk of an impending recession.
The Singapore economy experienced its first deflation since January 2010 at the beginning of this week and is expected to suffer further as Singapore shuts its borders. The Monetary Authority of Singapore (MAS) will release its next six-monthly monetary policy statement at 8am on 30 March, earlier than originally scheduled. Like most other currencies, the Singapore Dollar is currently suffering against the US Dollar due to the greenback’s safe-haven status but is stronger against the Pound.
Earlier this month, the Hong Kong Monetary Authority (HKMA) announced a surprise 50 basis points cut of its base rate to 1.5%. Despite periodic speculation that HKD will break its peg to the US Dollar, the HK Financial Secretary said that they will continue to monitor the situation and keep the peg stable
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Please do remember market turbulence is to be expected. Nevertheless the current situation will undoubtedly feel difficult to navigate. We are here to help. If you have specific queries please contact our financial planning team
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The above commentary aims to provide information. However, this is not intended to form professional advice nor should it be relied upon as such and before taking any particular action, specific and personal advice should be obtained.