RationalFX : Sterling rebounded against both EUR and USD on Thursday as the Bank of England announced further stimulus measures in an attempt to limit the economic damage caused by the Coronavirus to the UK economy………….
Policymakers voted unanimously in cutting the lending rate by 15 basis points to 0.1%, its lowest level since 1694 and announced it would pump £200billion into the economy through its quantitative easing measures by buying government and corporate bonds.
The news resulted in an initial sterling rally of 3%, but by the close of business the rally had eased.
Despite the new measures, sterling remains at multi-year lows against both EUR and USD and vulnerable to further losses. Sterling’s reliance on the inflow of foreign investor capital may prevent a significant recovery. In this current financial climate, sterling is a risky asset and most investors are trying to avoid risk where possible.
The euro moved lower on Wednesday following the announcement from the ECB that it plans to introduce a huge quantitative easing programme to combat the negative implications of the coronavirus.
The Pandemic Emergency Purchaser Programme (PEPP) will see the EU spend €750billion in government and corporate bonds before year end.
Source : ETFWorld.co.uk