The British Pound resurgence against the Euro continues to gather pace after tanking to decade lows amidst the coronavirus pandemic. The Pound is already up to one-month highs against the U.S Dollar and the Euro amidst a wave of positive news in the Kingdom.
British Pound Resurgence
The Pound has especially benefited from improved risk sentiment, having emerged that the spread of coronavirus is slowing. Currencies hit hard by the pandemic have started rebounding as the coronavirus pandemic dust continues to settle.
In addition, news that Prime Minister, Boris Johnson, is out of danger and has left the hospital after contracting the deadly virus also helped strengthen the pound against a basket of other major currencies.
However, the pound continues to trade sideways against the Euro on the UK’S Office of Budget warning that the country’s economy is at risk of contracting by 35% in the second quarter. Fears’ of the lockdown, lasting more than three months, is the latest headwind that continues to take a toll on the pound’s strength.
Pound Possible Tailwinds
The Pound had slumped to levels not seen since 1985 amidst concerns that the U.K was on its way to becoming an epicenter of the Coronavirus pandemic after Italy. In addition to the Coronavirus pandemic, the single currency had also come under pressure amidst indecision among Eurozone governments on an emergency package.
The British Pound remains vulnerable to further slides against other currencies should coronavirus cases continue to surge. The pound is always susceptible to a crisis, given the large current account deficit in the kingdom. During the 2009 financial crisis, it was one of the worst-performing currencies.
The most vulnerable currencies, such as the British Pound, should remain under pressure in the weeks ahead, especially on the International Monetary Fund warning about the health of the global economy. Talk of a global recession spiraling out of hand with the IMF warning that the global economy is poised to contract by 3% at the backdrop of the COVID-19 fallout should continue to weigh in on major currencies.