On Wednesday, the 18th of March 2020, there had been a mad-rush of American dollar purchase across the globe following a strident rise of coronavirus-led death tolls in Europe, the pandemic’s current epicentre, while bearing the heaviest brunt on Wednesday’s (March 18th) FX market, the British currency had nosedived to its lowest level since 1985 against American currency and had fallen to a decade-low figure against the Euro.
As a matter of fact, the British currency had been under tremendous pressure after hitting a two-month peak of $1.31 versus the American currency last week, but the sell-off wave had witnessed a steep acceleration on Wednesday (March 18th) as investors’ appeared to be overwhelmed amid growing number of newer coronavirus cases in Europe, which eventually had dampened the British currency’s outlook further.
Apart from that, a recent remark of UK PM Boris Johnson that there might not be an extension of an EU-UK trade deal deadline of end-2020 despite a draconian outbreak of coronavirus pandemic, market had reacted fiercely and started off a dumping of the British currency, while at some point of Wednesday’s (March 18th) intra-session trading, the pound had pummelled by as much as 5 per cent to $1.1452, remarking its lowest level since 1985, data from Refinitiv had revealed.
Nevertheless, at the later part of the day, following a corpulent rise of newer cases across the United States alongside remarks from British researchers that at least 30 per cent American nationals would highly likely to be infected by the Covid-19, pound regained some of its footings and wrapped up the day 3.6 per cent lower to $1.1615, while against the eurozone currency, pound fell by 3.5 per cent to 94.33 pence per euro, marking up its lowest level since the March of 2009.
Meanwhile, referring to a substantial scale of delay in response from the British PM Boris Johnson to counter the coronavirus outbreak amid a likely hard-Brexit scenario, the head of FX and Commodity research at Commerzbank, Ulrich Leuchtmann said on Wednesday (March 18th), “Sterling is in a very difficult situation - you don’t want any kind of extra risk in your portfolio.
You might be positive about (Brexit) or not, but you knew you were taking additional risk, which is not required at the moment so there is a big motivation for dumping sterling at the moment. ”