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Riku Tanaka
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Forex
April 6 22:15

GBP Drops After Britain’s Prime Minister Hospitalized Over Persisting COVID-19 Symptoms

"When a head of state or government is stricken like this, it will cause concern for holders of sterling and sterling assets," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.
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GBP Drops After Britain’s Prime Minister Hospitalized Over Persisting COVID-19 Symptoms
The pound dropped in contrast to the dollar and euro today (Apr 6) after British Prime Minister Boris Johnson was hospitalized in order to run extensive tests after he demonstrated prevailing COVID-19 symptoms..
Johnson’s hospitalization was a "precautionary step" according to Downing Street, and the decision was made because he was still having tenacious symptoms of the infection more than a week after testing positive for COVID-19. Additional pressure is placed on the pound by the fact that Britain's Constitution doesn’t have a clear transition or a deputization system in place, in the event that Johnson is unable to fulfill his duties for a prolonged period of time.
"When a head of state or government is stricken like this, it will cause concern for holders of sterling and sterling assets," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.
COVID-19, or the novel coronavirus, as it was called when it started spreading in China in December of 2019, has transformed into a global pandemic that has spread to in excess of a million people, has laid claim 68,000 lives and frozen enormous sections of the global economy.
In Asia, the Chinese yuan held its ground at 7.1134 per dollar after officials announced only 39 new coronavirus cases on Sunday on the mainland, all but one of which were generated from outside the country. This figure is up from the 30 that were announced the day prior.
The Japanese government has been feeling the pressure mount as the number of reported cases grows and the pace gains momentum on the relatively lightly hit island nation.
The Japanese yen fell 0.4% to 108.93 when compared with the greenback. Naturally it dropped compared to the euro and the Australian dollar as well. This drop can attributed to the information presented by the Japanese media, which reported that Japan’s PM is preparing a declaration of a state of emergency this week, which may be announced as soon as tomorrow (Apr 7)
"Coronavirus cases in Japan may not peak for another month, so the markets will think that now it's Japan's turn. A state of emergency is necessary, but this could be yen negative," Yamamoto said.
The US dollar marginally dropped to $1.0814 per euro and remained stable at 0.9769 per Swiss franc. Nonetheless, interest in the dollar remains delicate after Friday’s (Apr 3) report demonstrated that US unemployment rates are skyrocketing following the enactment of harsh measures to stop the spread of infections, which have also nearly frozen consumer spending and the nation’s manufacturing activity.
Major players in the oil production industry saw their currencies fall on Monday (Apr 6) as crude oil prices gave up a portion of their increases. This change can be largely attributed to Saudi Arabia and Russia delaying their negotiations of a potential agreement to cut production to Thursday (Apr 9).