As the UK’s confirmed COVID-19 cases continue to rise at an alarming rate, with more than 20,000 new confirmed cases each day, scientists have warned that their worst-case expectations of 80,000 deaths this winter could be exceeded.
As a result, Prime Minister Boris Johnson announced on Saturday that the UK will go into its second lockdown at 12.01am on Thursday 5th November, which will last until 2nd December. Senior Cabinet Minister Michael Gove added that this date could well be extended further too in the absence of evidence of a severe slowdown of cases, as confirmed by Government scientific adviser Jeremy Farrar. This announcement came just 10 days after Boris Johnson had told Parliament that another lockdown would ‘make no sense at all’.When the markets first realised the Government’s plans to put the UK into full lockdown back in March, GBP/EUR interbank levels reached lows of 1.06, which still stands as the lowest levels seen since the 2008/2009 financial crisis.
Over the coming days we expect further information from the Government regarding extra financial support for businesses and households, in addition to the already confirmed one-month extension of its furlough scheme which had been set to end on Saturday. These emergency measures will add to the £200 billion of emergency funds already spent to try to keep the economy afloat, however is currently set to contract by 10% this year, its worst performance sine the early 1700s.
The main event this week in the economic calendar will come on Thursday when the Bank of England will announce its latest interest rate decision. Known as ‘Super Thursday’, the BOE will release its rate decision, minutes following the meeting, along with its quarterly Monetary Policy Report. The Bank of England had previously hinted at the prospect of cutting interest rates below zero at its last interest rate meeting, suggesting it was looking into ways of implementing this, but had given no signals of its imminence. Since then, the economic outlook has tumbled in line with Coronavirus cases soaring, leaving markets wondering if a surprise cut could be on the cards. If this were to happen, or if any hints are suggested within the banks near-term forecasts, we could see GBP/EUR rates fall significantly.
There have been two encouraging signs of Brexit negotiation developments over the course of the last week. EU Chief Negotiator Michel Barnier extended his stay in London last week, suggesting that further progress has been made in negotiations. There were also reports that both UK and EU negotiators had been coming together on the topic of state aid, although both sides remain at loggerheads over the subject of fisheries. Talks continue this week and further progress could help the Pound to strengthen.
At the time of writing, over 82 million US citizens have already voted, and Democrat Joe Biden currently holds a vast lead over Republican Donald Trump. However, Trump continues to hope that swing state’s votes could help him in the running to remain as US President. According to a Reuters poll taken 27-29th October, Biden is ahead by 51% compared to Trump’s 43%.
Election results will be tallied up throughout the day tomorrow, therefore any clients looking to buy or sell US Dollars in the near future may wish to discuss your requirements with your Account Manager here, who can keep you informed of the latest developments.
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