The
British pound extended its losses versus major currencies on Tuesday amid expectations
the Bank of England would act soon to combat the dismal economic impact of the
spread of the coronavirus.
The
GBPUSD dropped for a sixth straight session to a low of 1.2210, noting that it
fell to a bottom of 1.2202 on Monday, the lowest level since October 2019.
Against
the euro, the EURGBP pair climbed to a new high of 0.9148, the highest since
September last year, while it is currently trading at 0.9126.
Meanwhile,
there are mounting expectations that the BOE would follow the suit of major
central banks by cutting interest rates or announcing new quantitative easing
measures to mitigate the damages stemming from the rapid outbreak of the
Covid-19.
Expectations
are in favor seeing new QE measures next week after the BOE's surprise interest
rate cut by 50 basis points last week.
Some
analysts argue that more rate cuts by the BOE beyond the current 0.25 percent could
be harmful rather than beneficial to the economy, which increase the case for a
QE re-launch.
In
2008, the pound fell dramatically after the accouchement of QE measures by the
BOE, which means any new action by the central bank may send the pound even
lower.
The
new appointed BOE Governor Andrew Bailey promised on Monday deliver further
“prompt action” when needed to overcome the impact of the global
pandemic.
“That’s
why you saw prompt action last week, that’s why you will see prompt action
again when we need to take it, and the public can be assured of that,”
Bailey said.
The
UK government plan to control the spread of the coronavirus by, effectively
letting it spread had caused the pound to sink.
An
aggregate of 55 people in the UK have now died after testing positive for the
Covid-19, which means that an increase of 19 deaths in just 24 hours, Health
Secretary Matt Hancock said.
One
hour later, the U.K. will release its unemployment report for the quarter-ended
January and jobless benefits for February.
It is worth
mentioning that the pound has been falling since touching a peak of $1.3199 on
March 9.
