Despite some weakness against both the dollar and the euro during Asian trading hours, the pound is back on the front foot during early trading in Europe. Sterling’s volatility stems from the admission into hospital of Prime Minister Boris Johnson and also by a timid global resurgence in risk appetite. Unless his condition worsens, news regarding the Prime Minister’s health is unlikely to have a long-lasting effect on the behaviour of the pound, as illustrated by the sudden change of direction that followed the start of trading in Europe. Sterling is up by more than 0.5% against the dollar due to a recovery in risk appetite, which is also reflected in other risk-related assets such as stocks. It appears that the draconian measures to contain the spreading of the coronavirus are starting to pay off, with the main European epicentres for the disease recording lower numbers in infections and fatalities. Amidst the doom and gloom of the last few weeks these may be feeble rays of hope, but are good news nevertheless with investors quickly grabbing hold of them.
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