The Bank of England has announced an emergency interest rate cut of 50 basis points, reducing the rate from 0.75% to 0.25%, in order to help the economy deal with the impacts of the coronavirus. The Bank of England also added that the UK economy is likely to weaken over the next few months. As a result, the Pound saw a sudden decline before recovering most of these losses.
They also announced a new Term-Funding scheme designed to allow banks cheaper funding and extra incentives in order to lend more to SME’s. This comes as Chancellor Sunak is due to deliver his first Budget later today, and is expected to announce spending increases to help the NHS deal with the coronavirus. Any additional fiscal measures announced will help ease any pressure on the Bank of England to cut rates further, and will help support the Pound.
Eurozone revised GDP was released as expected at 0.1%, which gave some support to the Euro. Italian industrial production data surprised the market at 3.7% compared to the forecasted 1.6% figure. German Chancellor Merkel will hold a press conference at 10:30am this morning, accompanied by Health Minister Spahn, regarding any containment measures that will be implemented. ECB President Lagarde has said this morning that the Eurozone risks a financial crisis similar to the one seen in 2008 because of the economic impacts of the coronavirus, which has weakened the Euro.
US Presidential Democratic candidate Biden has won support in Michigan, Missouri and Mississippi which further cemented him as the favourite to go up against President Trump. With over 1,000 cases of the coronavirus in the US and with Trump delaying his announcement of further measures to help with the outbreak, the Dollar has experienced volatility. US consumer price inflation data is due at 12:30pm this afternoon, which is likely to help determine the direction of the next leg for the greenback.