The pound has fallen nearly 2 per cent against the dollar today (March 18) despite the government's £350bn spending package to buoy up the British economy.
Sterling fell 1.9 per cent to less than $1.18 - levels not consistently seen since the 1980s - as the coronavirus crisis continued to hit global markets.
This morning the pound-to-dollar exchange rate sat at $1.20 but had fallen to $1.17 by 2pm.
According to FTAdviser's sister paper, the Financial Times, part of the decline stems from a global scramble for dollars prompted by companies saving funds to give themselves a safety buffer to ride out the crisis.
Today's 2 per cent dip came at the end of a 10-day decline which saw 5.5 per cent knocked from the pound-to-dollar rate after the Bank of England slashed interest rates to 0.25 per cent last week.
At this point, sterling was trading at $1.31. This was before many governments announced travel bans and lockdowns in a bid to curb the spreading virus.
Since then the British government has recommended avoiding public spaces like pubs, theatres and restaurants. It has also recommended against all foreign travel and all unnecessary domestic travel.
Chancellor Rishi Sunak announced spending of £350bn to boost the economy yesterday (March 17), saying he would do “whatever it takes” to support the UK through the crisis.
The pound has also fallen against the Euro today, from €1.10 to €1.08.
The spreading coronavirus crisis has also caused global markets to tumble as governments across the world shut down borders, locked down domestic travel and closed sports and leisure facilities.
Since February 24 the FTSE 100 has fallen by 26 per cent while the S&P 500 has dropped by 21 per cent over the same period. The Euro Stoxx 50 is down 30 per cent.
Volatile market conditions have seen indices suffer their biggest daily dives in more than 30 years this month.
imogen.tew@ft.com
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