Sterling falls almost 5% vs USD to lowest level since 1980s — Stanley Johnson not deterred.
On Monday evening the PM Boris Johnson announced the most stringent measures yet in the battle against COVID-19 and global markets reacted with renewed pessimism.
USD is currently sitting at 1.16 against Sterling, the lowest level since 1987’s Black Monday. Sterling has dropped 10% in total over the last month, following escalating measures to prevent the spread of Coronavirus worldwide.
February 17th saw the ER end the day at USD-GBP 1.3009; Last night saw it sink to 1.1644.
One analyst thinks the UK’s unilateral measures against the virus have impacted Sterling disproportionately compared to other countries, particularly after Boris Johnson’s U-turn on social-distancing and mass gatherings.
“The UK is really at odds with the responses we’ve seen in other European countries and I think that’s one of the reasons why sterling is so out of favour,” said Silvia Dall’Angelo, a senior economist at Hermes Investment Management in London.
The official government advice was initially to carry on as normal, but now a full lockdown has been implemented.
The plunge follows the announcement of quantitive easing measures by the Bank of England. The governor, Andrew Bailey, said the bank would offer an unlimited number of short-term loans to companies they vet as worthy of investment. The markets have reacted strongly to this announcement, as it is effectively a policy to print an unlimited amount of money to inject into the economy. Markets have therefore pre-emptively effected the devaluation of Sterling.
In the past week, the PM has advised the closure of pubs, bars, and the cancellation of all public gatherings. Glastonbury Festival has been cancelled, as has all professional football. Boris Johnson’s 79-year-old father, Stanley Johnson, has defended his inalienable right to go to the pub. Markets have yet to react.
