Sterling plummets to lowest in three decades as Covid-19 crisis deepens

Reporting from Bloomberg and Irish Examiner

Sterling plunged 5% to its lowest level against the dollar in over three decades and was trading at Brexit crisis levels of 93.4 pence against the euro as the shocks caused by the coronavirus rippled through global markets.

Investors fled from UK assets as the pandemic began spreading through Britain, with many fearing UK prime minister Boris Johnson’s response has fallen short compared to measures taken by other European nations.

Sterling has also suffered due to heightened global demand for the dollar.

“A combination of the safe haven dollar bid, the global asset sell-off, and liquidation of long positions from the election are all weighing on the pound,” said Neil Jones, head of foreign-exchange sales to financial institutions at Mizuho Bank.

Sterling fell 5% to $1.145 (€1.05), surpassing the lows it recorded after the 2016 Brexit vote. It was last lower in 1985, when the world’s richest nations signed the Plaza Accord to weaken the dollar and haul the US economy out of a recession.

Bank of England governor Andrew Bailey commented on sterling’s slump, saying the Bank of England can do more to minimise the economic impact of the coronavirus in concert with the UK Treasury.

“We watch it very carefully,” he said. “I don’t have a particular single story as to why what’s happening is happening. We’ve got a Monetary Policy Committee meeting next week. We will take it into consideration, consider carefully what the effects will be.”