Jason Heppenstall

Pound Knocked Back to 35-Year Low Against Dollar: More Pain to Come?

4 min read


Opening an account with Currency Solutions is completely free and you’ll be able to make currency transfers anytime at our excellent exchange rates.
Pound/Euro (GBP/EUR) falls to around €1.14
Pound/US Dollar (GBP/USD) slumps to $1.14 before recovering to $1.25
Euro/US Dollar (EUR/USD) stabilises at $1.09
Pound/Australian Dollar (GBP/AUD) jumps to AU$2.04

Over the course of March, the Pound has generally weakened against its main rivals, sinking dramatically lower against the US Dollar, and to a lesser extent against the Euro. With the Covid-19 pandemic driving most movement in the currency markets, investors have been buying and selling the Pound based on news headlines. It hasn’t all been bad news for Sterling though, there was a pronounced strengthening against risk sensitive currencies such as the Australian Dollar.

Coinciding with the UK budget, there was another interest rate cut by the Bank of England, which lowered rates to a record low of 0.1 percent. While this might mean that some mortgages and loans will become cheaper, it also means that Sterling faces more headwinds as it becomes a less attractive currency for investors.


The strength of the GBP/USD exchange rate ebbed and flowed over the last month, initially rising to a high of $1.31 but falling back to $1.25 by the start of April.

In the middle of this, on 19 March the Pound dropped dramatically against the Dollar, hitting a 35-year low of $1.14 as panic took hold of FX traders. It has since recovered somewhat.

There had been an initial rush to buy USD in March as people sought out safe havens to park their money due to the ongoing worries of how the Covid-19 pandemic would affect the world’s economies.

As the month wore on, however, we saw stock markets plunge worldwide and USD lost some of its shine. Some high US unemployment figures added to the sense that USD was not necessarily the safest currency to park one’s money.

This sense of unease quickened on 15 March when the US Federal Reserve cut interest rates to near zero – a move that would have been unimaginable only weeks before. This was, in fact, the second emergency rate cut in as many weeks, and it saw USD strengthen again on the basis that the cut was coordinated with a number of other central banks.

Staying in North America, the Pound has fluctuated against the Canadian Dollar over February, with GBP/CAD rising to CA$1.79 as global oil prices continued to sink. By the start of April, however, the exchange rate had fallen back again to around CA$1.76, although it remains volatile.


The Australian Dollar steadily weakened over March as risk appetite continued to dry up, with GBP/AUD hitting highs last seen in 2016.

As of 1 April, the Pound Australian Dollar exchange rate was $2.04, which is over 7 percent higher than it was at the start of March.

The Aussie (Dollar) has been hit by a growth forecast from the OECD which estimated that the Australian economy could shrink by a whopping 22 percent in the short term despite the Reserve Bank of Australia’s two emergency interest rate cuts in March.

Furthermore, with data revealing that retail sales and exports both slipped at the start of the year before the coronavirus pandemic became big news, it seems likely that AUD will remain under pressure for the foreseeable future.


With Europe now the epicentre of the global Covid-19 virus outbreak, attention has shifted to the possible ramifications for the Eurozone economy and what that means for the Euro.

Many FX traders were expecting the European Central Bank (ECB) to cut interest rates in March, but in the event the bank decided not to do so.

With Eurozone interest rates already in negative territory at -0.5 percent, the ECB instead unleashed a €120 billion stimulus package to help businesses.

This had the effect of bolstering the Euro against other currencies, and over the past month we have seen GBP/EUR fall from a high of €1.16 to €1.13, while EUR/USD hit a high of $1.14 before settling at $1.09 at the end of the month.


With the UK budget and the BoE interest rate cut now in the rear-view mirror, Sterling investors are trying to calculate how much damage the UK economy will sustain from the Covid-19 outbreak, and what this means for the Pound. Currently the fear is that if the virus is not contained, and lockdown measures for consumers and businesses go on for much longer, then the economy may not be able to sustain a V-shaped recovery as hoped.

We’ll start to get an idea of this on 9 April when UK growth figures are released for February, and then later in the month when consumer spending and unemployment figures come out.

Final thoughts

Opening an account with Currency Solutions is completely free and you’ll be able to make currency transfers anytime at our excellent exchange rates.

We appreciate that navigating the currency market can be daunting! So, a dedicated account manager will always be on hand to offer guidance.

Talk to an expert