Firmer After Tumble on News Johnson in Intensive Care

GBP price, news and analysis:

• Sterling dropped late Monday after news that UK Prime Minister Boris Johnson is in a hospital intensive care unit after his coronavirus symptoms worsened.
• However, the subsequent recovery in GBP/USD and steadiness of EUR/GBP suggest some underlying strength in the Pound as overall market sentiment continues to improve.

GBP/USD recovering after drop on Johnson news

The British Pound is rallying in Europe Tuesday, suggesting some underlying strength in the currency after its weakness late Monday on news that UK Prime Minister Boris Johnson is in a hospital intensive care unit after his Covid-19 symptoms worsened. Although he is reported to be receiving oxygen, he is not on a ventilator and Foreign Secretary Dominic Raab is deputizing for him “where necessary”.

Sterling’s rally is also a reflection of a widespread improvement in market sentiment on cautious hopes that the spread of the coronavirus pandemic may be slowing, helping riskier assets such as stocks, lifting risk-on currencies like the Australian Dollar and also the price of crude oil, which has crashed on concerns about the economic damage the spread of Covid-19 is causing.

As the chart below shows, GBP/USD is already higher in early European trading Tuesday than it was before the news of Johnson’s worsening health broke.

GBP/USD Price Chart, 15-Minute Timeframe (April 6-7, 2020)

Chart by IG (You can click on it for a larger image)

The FTSE 100 index of leading London-listed stocks was up 4% early in the session and EUR/GBP has also steadied after its jump on the news that Johnson had been moved to the intensive care unit of St Thomas’ Hospital in south London, across the River Thames from the Westminster Parliament.

EUR/GBP Price Chart, 15-Minute Timeframe (April 6-7, 2020)

Chart by IG (You can click on it for a larger image)

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Apr 07

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We look at Sterling regularly in the DailyFX Trading Global Markets Decoded podcasts that you can find here on Apple or wherever you go for your podcasts

— Written by Martin Essex, Analyst and Editor

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