Traders bet against sterling on British 'laissez-faire' approach to fighting Covid-19

Traders bet against sterling on British 'laissez-faire' approach to fighting Covid-19

Currency traders in sterling aren’t buying the British government’s efforts to tackle the coronavirus.

The pound has slumped nearly 8% in the past six days and sentiment in the options market has turned the most negative on its prospects this year.

Gauges of volatility have surged, as the UK looks slow in following other countries in limiting travel and social gatherings.

That shows investors are betting against countries where they think the virus will escalate next in coming weeks, with the UK government having pledged less cash to fight the virus or prop up companies than other countries such as France.

Nordea Bank picked out Britain, the US, and Sweden as having the potential for an “underlying exponential” spread of the virus.

“If this ‘laissez-faire’ approach proves to be wrong, then the pound and krona may prove to be the worst places to hide, as Sweden and UK could be seen as the ‘pariahs’,” said strategists at Nordea, including Martin Enlund.

- Bloomberg

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