The value of the pound has dropped to its lowest level in 35 years against the dollar, as investors continue to grow weary of the spread of Coronavirus.
Sterling ended Wednesday trading at $1.15, which marks a 5% drop in one day and its lowest level since 1985.
It follows a raft of announcements designed to ease the economic impact of the virus. Several market analysts have suggested that investors are concerned over how governments intend to pay for their extreme stimulus measures. Earlier this week, the UK announced £330 billion worth of government loans for small businesses affected, and the US Treasury revealed plans for a $1 trillion stimulus. And yesterday (Wednesday), the European Central Bank announced its own €750bn measures to support the eurozone.
Speaking to the BBC, Ranko Berich, head of market analysis at Monex Europe, said: “The UK’s response to the incoming coronavirus shock has been about as aggressive as possible in terms of monetary and fiscal policy, but this has done nothing to help sterling.
“Idiosyncratic factors such as the UK’s monetary and fiscal response or Brexit are beside the point: this is about the US dollar, which is proving unstoppable as global financial markets stare into the abyss of crisis-like conditions
Despite an initial rebound, markets in the US continued to fall on Wednesday with the Dow Jones ending the day down 6.3%, the S&P 500 falling 5.1% and the tech-focused Nasdaq down 4.7%. The S&P 500 index had plunged more than 7% at one point which caused an automatic cease in trading.
The UK’s FTSE 100 index also continued to show volatility, closing 4% for the day.