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Coronavirus: Pound takes hit as investors fret over PM Johnson’s condition | Business News

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The pound has taken a hit against the safe haven dollar on news of Boris Johnson’s deterioration as he battles coronavirus in intensive care.

Sterling lost six tenths of a cent against the greenback late on Monday evening when it was confirmed the PM’s condition had taken a turn for the worse.

Market analysts warned that the UK currency was likely to be pegged to developments on Mr Johnson’s health as Dominic Raab, the foreign secretary, steps up to assume some of his responsibilities.

The pound had been trading at around $1.23 in advance of the Downing Street statement.and had recovered some of the lost ground during Asia trading.

Its fortunes were in stark contrast to those of equity markets after the week began with solid gains in Asia and in Europe.

The Dow Jones Industrial Average in New York clawed back almost 8% of value lost since markets first took fright from COVID-19 in February.

Tuesday saw a cautious clawback in Asia despite that lead while the FTSE 100 was seen building on the previous session’s 3% gain – potentially rising almost 2% at the open.

But market analysts said the pound was the clear focus given Mr Johnson’s condition – marking a new front for its fortunes since the collapse in value witnessed since the Brexit vote in 2016.

Chris Scicluna, head of economic research at Daiwa, said: “Clearly the pound has weakened and that reflects the uncertainty and clarity over how much authority Raab will have.

“From an economic point of view there’s unlikely to be much change.

“But if and when there are difficult decisions to be made, the lack of guidance at the top could be concerning.”

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