RationalFX : Sterling headed for its best day against the euro in two weeks and edged higher from four and a half month lows against the dollar on Wednesday, as incoming Bank of England Governor Andrew Bailey said action could be needed to offset the effects of the coronavirus…………
Bailey said that any measures taken by the Bank of England would be best done in tandem with Britain’s government, curbing expectations the bank might follow Tuesday’s emergency rate cut by the US Federal Reserve. Bailey, who takes the helm at the Band of England on March 16th, said the situation with the coronavirus had ‘moved on’ in recent days and that he had discussed how best to coordinate with the finance ministry. Money markets in Britain are expecting the Bank of England to cut rates by 25 basis points at its next meeting, on March 26th. The probability was 80% before Tuesday’s Fed cut and almost 50 basis points of cuts are now priced in by the end of the year, compared with none a few weeks ago.
Monetary policy easing in the United States, fuelled by worries about the economic impact of the coronavirus, is endangering the dollar’s years-long rally and giving a boost to currencies around the world. The US dollar shed most of its gains for the year over the last few days due to the Fed cutting interest rates to cushion the US economy from the ripple effects of a potential spread of the coronavirus. The Fed acted on Tuesday, delivering a 50-basis point emergency rate cut, with many traders expecting at least two more such moves in coming months. While the US policy rates, which stand at a target range of 1% to 1.25%, have more room to fall but as many rates in Europe and Japan are already below zero, officials are hesitant to lower them much further.
5:00 – GBP – Bank of England Governor Mark Carney Speaks.
Source : ETFWorld.co.uk