RationalFX : Sterling recovered against both EUR and USD on Thursday following an improvement in global investor sentiment……..
A number of generous support packages from global central banks have put global stock markets on the road to recovery with a feeling amongst some investors that the worst of the Corona virus is behind us.
In the current climate sterling has been deemed high risk, and has moved lower over recent weeks as investors have sold sterling in an attempt to de-risk their portfolios. With investor sentiment picking up for risk-on assets sterling has benefited.
In addition to global investor sentiment, sterling was helped higher by the Bank of England’s decision to leave interest rates on hold at 0.1% and the quantitative easing programme to inject an additional £200bn into the economy unchanged.
The Bank of England stated it is currently too early to tell how severe the damage the corona virus will cause to the economy, but acknowledged mounting risks of widespread job losses and companies going out of business. Despite this, the bank indicated that they remain ready to act if needed.
The dollar fell sharply on Thursday as labour data released showed a record surge in unemployment claims.
The reading far exceeded market expectations of 1.6 million claims to read 3.2 million, up close to 3 million on last months reading.
The data is significant as it is a reminder to investors that despite central banks introducing significant measures to combat the corona virus crisis, the full extent of the virus is yet to be quantified.
Source : ETFWorld.co.uk