Bank of England acts again

Sterling is firmer against both the euro and the dollar after the Bank of England took further action to support the UK economy in the face of the coronavirus crisis, strengthening to 91p and almost $1.19 respectively, while the single currency is trading this morning at $1.08 against the dollar having dipped to around $1.06 at one stage yesterday. Equity markets have gained a touch after Wednesday’s slide, with core bond yields edging down this morning

The BOE cut interest rates to just 0.1% and announced £200bn of government and corporate bond purchases (QE), with the Bank’s new Governor, Andrew Bailey, saying the additional action was taken in light of the “spread of the virus, and evidence relating to (its impact on) the global and domestic economy and financial markets”

The President of the ECB, Christine Lagarde, says “economic activity across the euro area will decline considerably” as a result of Covid-19, and while “public policies cannot prevent this…they can…ensure that the downturn is no longer and deeper than it needs to be”

The number of new jobless claimants in the US rose sharply in the week ending 14th March (to 281k from 211k the week previously), perhaps reflecting some impact on employment from Covid-19, while similarly, the IFO index of the business climate in Germany fell to a multi-year low in March

It’s quiet on the data front today with existing home sales in the US the only release of note