RationalFX : Sterling moved lower against both the EUR and USD on Wednesday following an announcement from the Bank of England to cut interest rates by 50 basis points……….
The monetary policy committee cut the borrowing rate to 0.25%, its lowest level in history and announced measures to help combat the expected economic slowdown caused by the coronavirus.
In addition to this the BoE announced a new term funding scheme, estimated to be worth £100 billion to help small-medium size businesses which may find their cash flow interrupted by the coronavirus.
Also, new finance minister, Rishi Sunak, unveiled an immediate £30 billion fiscal stimulus plan to support the U.K. economy in the wake of the coronavirus with an additional £175 billion to spend over the next 5 years.
Sunak’s budget has been interpreted as GBP supportive as it provides a cushion to protect against the dual-threat of the coronavirus outbreak and UK-EU trade talks. The budget looks to target smaller businesses facing a potential cash-flow crunch. Sunak announced a one year suspension on property tax for small businesses whilst introducing government funding to cover all sick leave caused by the coronavirus.
USD moved lower against a basket of currencies on Wednesday evening as President Donald Trump left markets underwhelmed with his plan to tackle the coronavirus.
Trump’s plan appeared void of any real clarity on how to tackle the virus itself after the World Health Organisation declared the virus a pandemic. Trump did however announce that he would introduce a travel ban to restrict citizens from 26 European countries travelling to the USA for a month.
Markets had hoped for the US government to introduce health measures to help combat the virus. Markets now expect the Federal reserve to step in and cut the borrowing rate for a second time this month.
12:45 – EUR – ECB interest rate decision
Source : ETFWorld.co.uk