RationalFX: Tuesday saw the pound fall to its lowest level in two weeks against both the Dollar and the Euro as investors rushed to safe haven currencies following a crash in oil prices. ..
The US oil futures turned negative for the first time ever on Monday which caused the dollar to strengthen to two week highs against a basket of currencies, consequently as a result sterling fell. Sterling is likely to remain volatile as measures to limit the spread of the coronavirus, such as shutting down businesses, take their toll on the economy, Britain is facing what is expected to be its worst recession in 300 years.
In addition to the economic fallout from the lockdown, the pound is also being held down by Brexit, negotiations for which are due to take place via teleconferencing over the next three months.
The US Dollar rose against a basket of currencies on Tuesday as investors rushed to the world’s most liquid currency as a slump in oil prices weakened appetite for riskier assets. U.S. crude oil futures moved into negative territory for the first time on Monday, as a sharp fall in global fuel use due to the coronavirus pandemic creates a supply glut and a shortage of storage capacity.
Factory closures and travel curbs enforced to slow the pace of new coronavirus infections have triggered a collapse in oil prices. This is drawing money from commodity currencies and other risk assets to the safety of dollar-denominated assets.
Source : ETFWorld.co.uk