ews that Johnson had been moved into intensive care early-Monday evening, a little over a week after being diagnosed with the COVID-19 virus, triggered a sell-off in sterling of approximately 1% or so at its peak. Investors do not like uncertainty, with the incapacitation of Britain’s leader and his replacement by a deputy certainly falling under this category.

Sterling has, however, since recouped all of its losses, likely given that the temporary appointment of Dominic Raab as Johnson’s standby will not likely materially change the UK’s exit strategy from the virus. This strategy appears driven almost entirely by scientific and medical advice. It goes without saying that hopefully the PM’s move into intensive care is just a precaution and that he can make a swift recovery in the coming days.

Risk appetite returns as virus cases ease in Europe

Elsewhere, an apparent easing in the number of new confirmed cases of the virus over in Europe has brought a sense of hope to the markets, leading to a rebound in stocks and a move higher in the common currency.

The latest data seems to suggest that the worst may be over in Spain, Italy and Germany, the three countries worst affected by the virus outside of the US. Spain recorded its lowest number of daily cases since 23rd March yesterday, with new confirmed cases in Italy also at its lowest level since 17th March. Optimism that the peak of the virus may now be behind us in those countries has brought about a general improvement in risk appetite, sending the euro to its strongest position since last Thursday versus the dollar. Should the trend of easing cases in Europe and a continued acceleration in cases in the US continue, then it is the view of Ebury Partners that we may see a bit more strength in the euro in the coming days.

The relief rally has not been exclusive to FX, with stocks worldwide staging a move higher in the past 24 hours – the S&P 500 index for instance is up over 7% from Friday’s close. While lockdown measures so far appear to be doing their job in most major economic areas, there is no way of knowing whether this downtrend is sustainable. Japan, Singapore and South Korea have all been tightening measures in the past few days to control the virus spread after tentative signs of a second wave in confirmed cases. There has, however, been good news in China, with the number of deaths there at zero yesterday for the first time since the outbreak. Whether this data can be entirely trusted is another question, but hopefully this is a sign of things to come around the rest of the world.