Sterling edges lower as dollar dominates

By Ritvik Carvalho
·2 min read

* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv

By Ritvik Carvalho

LONDON, April 8 (Reuters) - Sterling edged lower against the dollar on Wednesday, as demand for the U.S. currency rose broadly amid growing concerns in markets that the coronavirus pandemic is far from over.

Earlier in the week, the pound saw knee-jerk reactions to news around the condition of British Prime Minister Boris Johnson, who - having tested positive for the coronavirus - was admitted to hospital and then moved to intensive care. He was last reported to be in stable condition.

Overall, sterling has traded sideways versus the dollar over the last week and a half, as risk sentiment gyrates while the crisis evolves.

"The pound's been pulled around by external factors at the moment - largely the broader risk and dollar environment - with key themes in equities and oil markets driving FX sentiment," said Viraj Patel, global FX and macro strategist at Arkera.

"We've seen a couple of knee-jerk moves lower on the headlines over PM Johnson being in hospital. But these have faded quickly, with the short squeeze and positioning adjustment in high-beta currencies dominating FX markets," Patel added.

By 0830 GMT, the pound was 0.24% lower at $1.2303, but gained against a broadly weaker euro to trade 0.1% higher at 88.20 pence.

Economic data in the UK added to the gloom.

British employers' demand for staff plummeted in March with job vacancies contracting for the first time in nearly 11 years as the coronavirus pandemic brought hiring activity to a halt, a survey of recruiters showed.

Britain's markets watchdog the Financial Conduct Authority set out temporary measures to help companies raise cash quickly to get through the epidemic.

But only a small fraction of British companies have successfully accessed financial help from the government to withstand the economic fallout from the coronavirus outbreak, while scores more have failed so far, a survey showed.

(Reporting by Ritvik Carvalho Editing by David Holmes)