The Federal Reserve's surprise rate cut on Sunday helped to provide the Pound Sterling with a lift during Monday trade in London, but the Pound still remained under pressure against the common currency Euro. With the growing fallout of the Coronavirus already negatively impacting global economies, a number of key central banks have moved to put extra liquidity into the system in order to alleviate any potential pain. The Dollar, even after the interest rate cut, is being viewed by FX traders as a safe haven; as a result, it and the Japanese Yen and Swiss Franc, have seen increased demand as concerns over the viral assault send jitters through global financial markets.
As of 10:10 am in London, the GBP/USD was trading higher at $1.2283, a gain of 0.644% and moving away from the session trough of $1.22517 while the high was recorded at $1.24373. The EUR/GBP was trading at 0.9118 Pence, up 0.7992%; the pair has ranged from a session low of 0.89796 Pence to a peak of 0.91343 Pence. The USD/JPY was trading at 105.7540 Yen, down 1.99% and off the high for the session which was recorded at 107.909 Yen.
Central Bank Efforts
The Reserve Bank of New Zealand also moved to lower its cash rate to 0.25% from 1% as part of the effort by global central banks to ensure stability to the money supply. The NZD/USD was trading lower at $0.6043, down 0.2377%. In Japan, while the central bank has little room to modify its interest rate position given that it is already in a negative rate environment, the BOJ announced earlier today that it would buy ETFs, considered a higher risk asset, at double its current pace. Moreover, Governor Haruhiko Kuroda announced that a new loan program would be created that would extend zero rate loans of a 1-year duration to financial institutions which is intended to encourage lending to businesses affected by the outbreak.