According to reports overnight, there are now 4,515 people infected with the virus, up from just 291 cases on January 21st, while 106 deaths have been confirmed, compared to nine a week ago.
In response, China has quarantined large parts of its territory, while growing numbers of Chinese are choosing to stay indoors. In turn, it’s possible that China’s economy might slow in early 2020.
This has weakened the Australian dollar, first because if China’s economy slows, China’s appetite for Australian commodities like coal and iron ore might weaken.
Second, if China is in quarantine, fewer tourists might visit Australia this year, thereby weighing on Australia’s GDP (Gross Domestic Product) growth this year.
Gbp on Tenterhooks Ahead of BoE Decision Tomorrow
The world’s investors seem very uncertain if the BoE will keep interest rates at their current 0.75%, or cut them back to their previous all-time low of 0.5%, with odds placed at roughly 50/50.
On the one hand, the central bank might maintain steady UK borrowing costs, given signs that Britain’s economy has picked up since last month’s decisive general election result.
In general, when the BoE maintains or hikes UK interest rates, this supports the value of sterling. This is because higher interest rates make investing in UK-denominated assets more profitable.
Conversely, when the central bank reduces borrowing costs, the pound traditionally falls. We’ll find out the BoE’s decision, and sterling’s reaction, tomorrow at midday.
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