The GBPUSD suffered a fall from its highest level in close to 10 days following the breaking news that both UK Prime Minister Boris Johnson and Health Secretary Matt Hancock tested positive for the coronavirus. The drop of close to 100 pips does have a question market over it on how long it will last, considering the persistent weakness that has transpired in the USD in recent days as well as the inevitability that world leaders are at the same risk of everyone to the virus.
Boris Johnson is set to remain in his position as Prime Minister and there is no imminent change in power as he works from home, therefore questions are valid on whether the GBP move lower is justified. Some could say it is actually a surprise given the density of the global virus breakout that more senior officials and world leaders have not been announced as testing positive.
At time of writing there is a risk that the bubble of optimism and feel-good factor across world stock markets in recent days will fade. The FTSE 100 is down more than 5% and the Dow Jones 4% during trading today.
Although central bank officials and governments can be commended for the support they are providing the global economy in its time of need, this does not mean these measures will defeat the issue at hand – a disease outbreak.
Should the number of world virus cases reach 1 million over the next couple of days, investors will just request more from officials in stimulus support and that isn’t realistic considering everything that has already been provided.
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