No matter who you are, where you are or what you are doing now, the Coronavirus, aka COVID-19, is having an unprecedented impact on your life and possibly livelihood right now.
In the last few weeks, we have seen the stock markets rocked by its biggest levels in 35 years. So, it’s only natural we have seen the currency markets go through a roller coaster period as well. One of the currencies hit the hardest in recent weeks is the British pound. Just over a month ago on the 19th February the pound reached its highest levels against the euro at 1.2080, only seen once since July 2016 after the pound fell following the Brexit leave vote. Last week we saw the pound drop to its lowest level seen since January 2009 which at the time was a historical low of 1.049 as the world came to terms with the banking crisis. Many have questioned why the pound has suffered so badly at a time when the virus is affecting the global economy especially with the rest of Europe evidently reporting far more cases the than in UK currently; Italy being the second worst effected country behind China. But history tells us during a financial crisis and global recession the pound is a currency that historically suffers the most. As investors choose safe haven currencies like EUR, USD, CHF, and JPY, which have all outperformed the pound by big margins as the virus forces the whole world into lock down, putting the pressure on economies right around he world.
It wasn’t too long ago we wished for all the constant talk and reports of Brexit to come to an end; with the UK entering the final but critical stages of exiting the EU, the exit seems in little to no doubt, the terms are still questionable. Boris Johnson insists that trade negotiations need to be at an advanced stage by June if not the UK will walk away from talks resulting in the UK leaving the EU at the end of this year with a no deal in place, this was always viewed as the worst case scenario for the UK before the COVID–19 changed the world, and with PM recently stating no extensions would be requested despite the virus outbreak, it’s almost seems the prospect of a Brexit No deal as inevitable rather than a limited possibility, something that makes it even more difficult for pound sterling’s value against the euro to see any gains, which has presented opportunities for those holding of euros looking to buy pounds
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