March 18, 2020 / 10:30 AM / in 20 days

Pound tumbles to six-month lows vs dollar on funding concerns

FILE PHOTO: Pound and U.S. dollar bills are seen in this illustration taken January 6, 2020. REUTERS/Dado Ruvic/Illustration/File Photo

LONDON (Reuters) - The pound fell to a six-month low against the dollar and weakened against the euro on Wednesday as investors focused on the economic impact of the coronavirus.

News that Britain would launch a 330 billion-pound ($399 billion) lifeline of loan guarantees and provide a further 20 billion pounds in tax cuts, grants and other help for businesses facing the risk of collapse was shrugged aside by traders.

Growing concern that funding availability will remain under pressure for the foreseeable future led traders to sell the British currency against the greenback.

“The main reason for dollar demand is liquidity concerns as in volatile times, companies and investors need dollars to settle transactions and as long as these concerns persist, we expect the pound to remain on the back foot,” strategists at UBS Wealth Management said in a note.

Against the greenback, the British currency fell 0.4% to $1.1985, its lowest since September 2019 while against the euro, the pound weakened 0.4% to 91.70 pence.

Reporting by Saikat Chatterjee; Editing by Nick Tattersall

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