On Wednesday it was announced that the UK has now spent a record £8.7bn on interest.

Wednesday’s budget will be a focal date in the calendar this week as investors will be looking to see what plans are being put in place to support the economy amidst coronavirus concerns.

sterling is up 2% against the US dollar this month, however investors are speculating whether these gains will be lost if Wednesday’s budget is considered bad for growth, along with the upcoming Bank of England rate setting committee due to meet towards the end of the month with predictions that a cut of 0.25% will occur. A rate cut would likely be negative for the pound.

The pound has been losing against the euro for its fourth consecutive week. Losses came as stock markets and commodity prices fell considerably as investors are considering the likely impact the virus will have on the global economy.

Coronavirus continues to dominate headlines in the UK and abroad even to the point of overshadowing Brexit, with the number of cases rising to 273. Today the government’s disaster emergency committee could sign-off plans to move the UK into the “delay” phase of efforts to fight the virus.

Where Next for Pound to Euro?

EUR strengthens against GBP and USD 

The euro has risen against both the pound and the dollar, leaving the European Central Bank (ECB) with the difficult decision as to whether to push through a rate cut. The predicted 10-point cut is expected to happen on Thursday which would move rates to -0.6%. Commenters are unsure if this will help the eurozone economy. If EUR continues to rise it will most likely continue to hurt European exports.

Coronavirus concerns continue to rise across Europe with Italy being hit the hardest. Current numbers show 5,883 confirmed cases up from 4,638 the previous day. After this jump the Italian Government has placed the entire Lombardy region in quarantine affecting around 16 million people. Areas include both Milan and Venice.

Lack of Monetary Policy Action Hampers USD Recovery

The dollar took a small boost now that Joe Biden looks most likely to become the democratic nominee overtaking the previous front runner progressive Bernie Saunders. Now a Trump-Biden election race is looking most likely.

Overall, the dollar fell against most major currencies over the last week after a very poor performance from the Dow Jones and S&P 500.

The Federal Reserve Bank announced another interest rate cut in March of 25 basic points following their 50 points cut on Tuesday to offset economic risk from the spread of coronavirus.

Coronavirus cases are increasing in the US with the number of deaths rising to 19 leading to California’s declaration of emergency, and multiple events cancelled across the country.

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