Sterling losses were erased almost immediately after optimism from the fiscal support Bank of England is going to provide. It would be better to stay at the side lines for now.
- The Bank of England cut rates by 50bps today in an emergency move to bolster the economy amid the coronavirus outbreak.
- The MPC voted unanimously to slash the bank rate from 0.75% to 0.25%.
- The Bank of England also introduced a wider package of measures such as the Term Funding scheme which could provide in excess of £100 billion in term funding.
- The whiplash on GBP/USD, whereby the losses from the knee-jerk reaction from the market were erased almost immediately, would be a caution for traders to stay on the side lines and wait for more signals from the market.
- Furthermore, ECB will be having their monetary announcement tomorrow and that could be a market mover as well.
Fullerton Markets Research Team
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