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BoE issues warning impacting Sterling

30 Jun 2020

Traders are keeping an eye out on the latest coronavirus developments, as many are fearing a second wave of the outbreak. The British Pound will struggle if the number of virus cases increases. Additionally, the Sterling is relying on the release of the June PMIs, that will highlight Britain’s economic activity over the month. If the figures turn out to be weaker than expected, the currency will be weakened. 

The UK currency was affected by the disappointing GDP figures for the first quarter. Pantheon Macroeconomics’s chief UK economist, Samuel Tombs described this as “The biggest contraction for 40 years, even though Q1 contained just nine lockdown days.”

The Bank of England also gave its warning about unemployment, as its chief economist, Andy Haldane said, “Both the UK and the global economies are already well into the “second quarter” – the recovery phase. The UK’s recovery is more than two months old, while the global economy is perhaps three months into its recovery, in both cases from an exceptionally low starting point.”

The Pound to New Zealand Dollar exchange rate is on the verge to end the quarter on the worst level, as fears of a second wave of outbreaks impacted risk-sentiment. 

Other than the New Zealand Dollar, fears of a continuation of the virus hit the British Pound as a result of its handling of the pandemic. The pair’s value will also depend on the market trade sentiment.

The Pound to Swiss Franc exchange rate reached 1.16 this morning, falling by 0.2%.