The British pound was higher than the US dollar on Tuesday.
The dollar fell sharply after the Fed launched another support program and the sense of risk improved, reducing the need for the dollar as a paradise.
Despite some significant gains against the dollar, the pound was under pressure against many currencies after the announcement that British Prime Minister Boris Johnson was admitted to intensive care.
GBP / USD rose 103 pips (+ 0.85%) to 1.2332 with a daily range of 1.2169 to 1.2385 at 4:00 p.m. GMT.
The currency pair fell below 1.22 at the start of the session, but returned to equilibrium before climbing 100 pips above 1.235. Today’s gains have swung the exchange rate to a positive return for the week to date of + 0.84%.
Pound takes advantage of weak dollar
Prime Minister Boris Johnson in intensive care means additional political uncertainty in the UK when all stakeholders are needed in the midst of the coronavirus crisis. The pound dropped to the news but rebounded later when Downing Street updated that the PM was in good spirits and did not need a fan, which would suggest a much worse state.
Foreign Minister Dominic Raab will take over from Johnson during his incapacity. Raab in the morning comments said: “There is an incredibly strong team spirit behind the Prime Minister, we will implement his plans as soon as possible”
Dollar falls on new Fed easing measure
The Fed announced on Tuesday a new “term financing facility”, saying it would give more details on how it works on Thursday. The plan is to support the so-called “pay protection system” – the cheap $ 300 billion loan system that companies can use to keep paying staff. It was announced as part of the US government’s $ 2,000 billion stimulus package.
Term financing facilities are ideal for commercial banks because they can make loans and take almost no risk in doing so, because the loan can always be turned over to the Fed in exchange for money to continue lending.
Heaven like the dollar had already fallen behind as stock markets rallied around the announcement that a further round of stimulus packages of around $ 1.5 trillion might be in sight in May.