It’s rare that a honeymoon ends before a wedding has even happened. But for this 2.5-month-old Conservative government, even the news that Boris Johnson and Carrie Symonds are expecting and getting married couldn’t save it from a weekend of significant challenges – floods, coronavirus, trade talks and shouty Home Secretaries – and some doubt that they are dealing with very well.
Even by the feverish standards of the past few years, a 4 or 5% drop in the value of the pound against the euro is noteworthy, and that’s what we’ve seen over the past fortnight.
Feverish is the key to it this morning, with the Bank of England saying that it will “ensure all necessary steps are taken to protect financial and monetary stability” in the face of the global coronavirus outbreak. This is a veiled threat of interest rate cuts.
On top of that we have the trade talks starting today, with 100 British civil servants heading to Brussels amid much renewed talk of “no deal” being a likely outcome.
Although the fall in the pound is significant, we can’t say we weren’t warned. We also cannot say that it won’t continue. The pound is not – unlike some currencies – being seen as a safe haven in the face of the virus, so we could see further significant falls.
Despite all this, the pound is still well above the rate we saw for most of the past three years. If you would like to lock it in with a forward contract, please call your trader on 020 8108 5337.
