The pound had another resilient week, strengthening by an average of 1.9% against the other major currencies.
This is despite the downgrade of Britain’s credit rating by Fitch. The pound’s strength can be attributed to the US Federal Reserve announcing billions of liquidity to stabilise the financial markets. With the UK economy so intrinsically tied to its financial services sector, sterling has seen some relief and gains despite market volatility. With the Fed announcing that it will allow central banks to exchange their holdings of US Treasury securities for overnight dollar loans, albeit it temporarily, sterling gained on majors.
Many of the ecostats reflect the UK economy pre-pandemic, so the far from gloomy figures will change in the coming weeks. The Bank of England’s (BoE) credit and mortgage approvals figures showed a six year high in February, and GfK’s index of consumer confidence weakened by two points to -9, a better showing than the forecast -15. But this was carried out in the first two weeks of March, so figures will surely worsen next month.
Interesting stats were released from the Office for National Statistics (ONS), comprehensively covering how UK businesses have been suffering because of the coronavirus pandemic so far. The stats show that many companies were already struggling in the two weeks before PM Boris Johnson announced enhanced movement restrictions and the closures of non-essential businesses. This has still been put down to social distancing, with economists are warning that activity for the UK could be down by 15% across the quarter.
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