The pound faces an interesting week against the euro, with competing influences including our old friend “Brexit talks” but also the coronavirus – or as we should probably call it, Covid-19.
The reassuring presence of the English Channel means that – even in the days of international aviation – the UK seems to face less of a threat than the EU countries of Covid-19 becoming established. Several Italian towns are already being quarantined, and the border between Austria and Italy policed. But it is in its effect on trade that the potential pandemic is worrying economists in the Eurozone. Germany in particular could be severely affected if trade with the Far East is further affected. It is something the EU’s largest economy, already slowing down, could well do without.
On trade talks, the whisper is that EU negotiators may be willing to give a little on “dynamic alignment” of the UK and EU on rules. Dynamic alignment would have meant that any change in rules in the EU would have to be mirrored by the UK, something the Boris Johnson government would presumably not be able to agree to. Removing this obstacle could be positive for sterling.
The threats to the pound remain strong, however. Your trader can talk you through your currency strategy, so please do call us on 020 8108 5337.
